Objections to Risk Management Program

Ontario Agriculture Minister Leona Dombrowsky addressed the joint annual meeting of the Ontario Soybean Growers, the Ontario Wheat Producers' Marketing Board, and the Ontario Corn Producers' Association on Tuesday, March 7, 2006. Coming the day after the Minister's less than satisfactory announcement of March 6 which contained no commitment to implement our Risk Management Program (RMP), both the Minister and the audience of 600 grain and oilseed producers are to be complimented. The Minister is to be commended for showing up and addressing an audience that could not be considered a friendly one. The audience is to be commended for showing exemplary restraint despite a rapidly deteriorating financial crisis in the Ontario grain and oilseed sector, and no government commitment to our RMP.

However, the Minister did not answer the three questions following her short speech especially well. One question asked the Minister point-blank what objection she had to implementing a fully-funded RMP. The answer appeared to include a number of elements:

Taking these objections in turn, CAIS works for some other sectors such as pork and cattle and greenhouse operations. Tweaking would improve CAIS for these sectors. Do it. But, both levels of government now readily admit that CAIS does not and cannot work for grain and oilseed producers. Our production and reference margins are declining because our prices are artificially depressed by US subsidies. RMP was purposely designed as an income support "patch" on CAIS to work for all field crop producers including livestock producers who grow and feed their own crops. Keep CAIS and tweak it if we must to improve it for those sectors that benefit, but re-introduce companion programming linked to CAIS so as to provide adequate income support for grain and oilseed producers. We cannot wait for both levels of government to renegotiate APF2 in 2008. Implement RMP now. Besides, government did not involve producers when they designed CAIS under APF1; we have no faith that governments would involve producers in meaningful negotiations under APF2 either. That's why we designed RMP ourselves.

Both levels of government have repeatedly rejected our RMP on the pretext that income support programs that make commodity specific payments triggered by price are not permissible under international trade agreements. Balderdash! Existing and proposed WTO agreements permit such programming under both "amber" and "blue" box programming. International agreements merely impose upper limits on spending for such programming. Canada's reported spending is far beneath these limits. Both existing and proposed WTO agreement spending limits for "amber" and "blue" box programs leave more than ample room for Canada to introduce a fully-funded RMP.

Both levels of government trot out the objection that RMP might trigger trade reaction by the U.S. Balderdash! RMP merely replaces Market Revenue Insurance, which was operational from 1991 through 2004. MRI was never successfully countervailed. Therefore, RMP is not a new trade "irritant". Moreover, the U.S. has a habit of launching trade actions regardless of the validity of their case. Not one Canadian agricultural export is a sufficiently large percentage of the American marketplace to cause legal injury. The U.S. has lost every complaint and will continue to lose every complaint. Rejecting RMP on this basis is bogus. Even more telling is the fact that the Minister's own Ontario Grain and Oilseed Payment announcement March 6 made commodity specific payments triggered by price based on historic acreage and yield. All these elements are exactly as contained in the RMP. Why is trade compliance an issue for RMP but not OGOP? Obviously, structure of RMP is not the issue.

The Provincial government in particular complains that RMP is too costly. That is a very questionable allegation. Had RMP been operational for 2005/06, it would have come to a close on March 31, 2006. Assuming a worst case scenario (meaning all grain and oilseed producers in Ontario had met the RMP criteria for participation by taking Crop Insurance on all acreage in Ontario, all were enrolled in CAIS, all had taken the highest coverage level, and all paid the highest premium), the following would have been the actual payments, costs, and net cost to government for 2005/06 RMP:

All both levels of government had to do was double their ad hoc payments and channel them into the RMP rather than make direct cheques. All that was needed was the political will to double the funding provided and implement RMP.

The final objection to implementation of the RMP was that Federal participation and funding was required first. It is time to match the leadership demonstrated in Quebec and Alberta. Both have moved ahead and forced the Federal government to catch up. Moreover, in the Minister's own March 6 announcement, assistance for the Horticulture sector was unilaterally provided by the province with the Federal government now under the gun to match.