OTTAWA - Farm organizations are reacting favourably to the Mon., Feb. 25 announcement by Agriculture and Agri-Food Minister Gerry Ritz of changes to the Advance Payments program - Legislation to amend the Agricultural Marketing Products Act T44) - that will make it easier for livestock producers to access cash advances to get them through their present financial crunch. Two of the significant changes are the elimination of the CAIS clawback, and accepting the second 50 per cent value of cattle as security.
Hugh-Lynch Staunton, CCA President, was in attendance at the announcement and took the lead in responding on behalf of the Canadian cattle industry.
"This government has worked closely with producer groups to specifically target help to sectors facing severe challenges," Ritz said Feb. 25. "Right now Canadian livestock producers are struggling with a high dollar and high production costs, but these kinds of short-term struggles can strike any agricultural sector."
The Canadian Federation of Agriculture (CFA) is welcoming the measures announced by Ritz to assist struggling Canadian hog and cattle producers. The changes to key programs will provide relief and renewed confidence for the industry.
"These measures give our hard-hit livestock producers more tools for overcoming the obstacles they face and getting through this difficult time," said Bob Friesen, CFA President and a Manitoba hog producer. "I want to thank Minister Ritz and his government for consulting with industry and delivering this much-needed boost."
A number of factors have come together over the past year to create a perfect storm' for the livestock industry, including: rising input costs, a high Canadian dollar affecting exports, and reduced domestic slaughter capacity. The design of existing government programs severely limited the ability of producers to access funds to keep their operations viable through the difficult time. The changes proposed by the government to the Advance Payments Program (APP) under the Agricultural Marketing Products Act (AMPA) will give producers easier and longer-term access to immediate cash flow.
"It is not exaggerating to say the measures contained in this legislation are needed by producers immediately," said Friesen. "We therefore call on the opposition parties and the Senate to come together and push this Bill through the legislative process with all possible speed."
The Feb. 25 announcement came just three days after Friesen told a gathering of producers at the Dundas Federation of Agricultural meeting that Ottawa had been ignoring the crisis caused by the higher dollar and rocketing feed costs.
"The federal government has not been stepping up quickly enough" to alleviate the crisis, Friesen said in Chesterville Feb. 22.
The minister had said he was not interested in short-term loans or in advance payments to get producers through the present crisis. Ottawa wants "security at a time when our operating lines are maxed".
Canada's pork industry was built on a 65-cent dollar and every penny rise in the value of the loonie costs Canadian producers $230-million in exports to the U.S., which is already guilty of protectionist livestock policies, Friesen said.
"Since coming to office, this government has already delivered flexible and bankable programs that will provide up to $1.5-billion in funding to livestock producers in late 2007 and 2008. Proposed changes to the Advance Payments Program (APP) through the amendments to AMPA will make sure Canadian producers can access up to $400,000 in repayable advances," Ritz said in making the announcement Feb. 25
The proposed amendments to the APP will provide easier access to immediate cash flow by:
Removing the requirement for livestock producers to use a Business Risk Management program, such as AgriStability as security for a cash advance and allowing producers to use inventory as security. This brings the treatment of livestock more in line with other produced commodities.
Adding "severe economic hardship" as a condition to offer emergency advances, on the recommendation of the Minister of Agriculture and Agri-Food and the Minister of Finance.
Revising the security requirements for emergency advances and increasing the emergency advance available to producers from a maximum of $25,000 to $400,000 in conditions of severe economic hardship.
Taken together, program improvements made in December and proposed changes to AMPA represent significant changes to advance payments. Producers will have quicker and easier access to cash advances and if all producers take advantage of the improved program, an estimated $3.3-billion in advance payments will be available. The federal government has worked with industry in developing the changes to AMPA.
"This is much needed help," said Clare Schlegel, President of the Canadian Pork Council and a hog producer in Ontario. "Hog farmers are struggling, facing the worst crisis in their farming history. What has been announced today will provide the breathing room that we have been asking for."
"We welcome this change as it will provide much needed cash flow to producers at a time when the current crisis across the country has reached a critical point," said Hugh Lynch-Staunton, President of the Canadian Cattlemen's Association (CCA). "This improvement to the Advance Payments Program is consistent with a CCA recommendation and will improve Canadian producers' ability to deal with their liquidity crisis. It is a step in the process, and we will continue to work with the government to implement further improvements in our business risk-management programs, the regulatory environment, and market access to improve the competitive environment Canadian beef producers are working in."
The Government is also announcing a new $50-million initiative with the Canadian Pork Council to deliver a sow cull program that will help restructure the industry to bring it in line with market realities.
In addition, over the next two weeks, Ottawa will work with industry and review meat inspection user fees to assess their impact on competitiveness of the sector.
As well, Ottawa is working to reduce costs and increase competitiveness under Canada's enhanced feed ban. This complements the federal government's commitment of $80-million to help the industry adjust to new feed standards.
To get advance payments to producers quickly, the collaboration of all political parties will be required to agree to quick passage of AMPA amendments.
Ottawa will continue to work with the livestock industry to find ways of helping industry position itself to be competitive in the long term. These measures include enhancing market access efforts in addition to reducing the regulatory burden and examining means to reduce the cost of the feed ban implementation.