Five
Reasons You Need RMP for 2008
For those of us
who spent three years lobbying the provincial government for the Risk Management
Program (RMP), it may seem strange to allow winter to pass without driving a
tractor to a rally in an urban centre.
RMP is a price insurance program designed by and for Ontario grain and oilseed
farmers. We fought tooth and nail for RMP, and we saw our efforts rewarded when
in the Spring of 2007 Minister Dombrowsky announced Ontario would launch a three-year
pilot program, beginning with the 2007 crop.
It seems that everyone from business analysts to urban journalists is telling
us grain and oilseed prices will continue to soar next year. If those predictions
hold true, it’s unlikely we’ll trigger a payment on RMP.
With many grain and oilseed farmers still reeling from the devastating effects
of low prices in 2006 which has still not been addressed by either the provincial
or federal government - and continuing to wait for the federal funding to top
up RMP – it’s tempting to save a few dollars by foregoing the premiums
required to enroll in RMP for 2008. But when it’s time to decide whether
you remain in the RMP for 2008; here are five reasons why you should stick with
the program:
| 1. | Once you’re out, you’re out. RMP is a three-year pilot program that began with the 2007 crop year. In this three-year time frame, representatives from Ontario Grains & Oilseeds, OFA and OMAFRA are part of an RMP technical committee which will help iron out its kinks. Until then, the rules are clear: producers who want RMP have to stay enrolled for all three years. If you opt out in ’08 because prices are good, there’s no opting in for ’09 if prices take a turn for the worse. But the good news is, RMP has four coverage levels. Producers can remain enrolled in the program for 2008 while saving significant costs by selecting the lowest coverage level, and paying the lowest premium. |
| 2. | Markets
are volatile. Nobody wants to think about the hard times when prices are
good, but it’s only been a few months since prices rose above RMP support
levels. The current market situation reinforces the need for programs like
RMP. Obviously, farmers prefer to make their money from the marketplace;
but when prices are affected by circumstances beyond their control they
need a mechanism that helps them manage risk and continue to make sound business planning decisions on the farm. |
| 3. | Hope for the best, prepare for the worst. Everyone knows prices are cyclical, and with so many years below the cost of production, it’s our turn to see an upswing. But any perfect storm leading to a market crash will leave only growers enrolled in RMP triggering a price support payment. Like any business person, farmers prefer to get their money from the marketplace. We buy insurance on our homes and cars, hoping we never trigger a payment. RMP is insurance for low prices. Here’s hoping nobody needs to collect. |
| 4. | If
you don’t use it, you’ll lose it. We rallied, we lobbied and we
negotiated for a premium-based price insurance program that protected producers
when prices for our crops fell below an agreed-upon level. We argued that
farmers needed tools to make long-term business planning decisions to ensure
a stronger future for farm families. Farmers will pay into RMP every year,
but government funds are only distributed when payments are triggered. What better time to secure a permanent RMP from our provincial government than a period of high prices and low cost to them? |
| 5. | We’re
still waiting for federal funding. When the federal government told us they
wanted to put an end to funding companion programs, we heard them loud and clear. Now we’ve designed AgriFlex - a new federal program that would allow the federal government to maintain its priority of equitable treatment across Canada’s diverse agricultural regions and sectors, while still contributing to new and existing programs that have producer and provincial partners. AgriFlex will allow provinces to access federal funds and use them more flexibly. In Ontario, that’s how we hope to see federal funds used for programs such as RMP. To access those dollars, we need to prove that producers want and need RMP. |
The mainstream
media continues to report that grain and oilseed farmers have never had it so
good. Those of us more connected to the industry know we’re still reeling
from the effects of low prices and flooded markets experienced as recently as
2005 and 2006.
As OCPA staff combs through articles and media clippings in preparation for
our 25th anniversary, we’ve found some materials that are eerily familiar.
Old headings boasting ‘a new era for grain farmers’ and ‘unlimited
pricing opportunities’ could just as easily have been printed last week.
We’ve been here before.
RMP was designed by farmers, for farmers, as a tool to help regulate the effect
of circumstances beyond our control - such as damaging foreign policy. Those
of us who lobbied for RMP hope you’ll use this tool to help you manage
your risk and make business planning decisions that will bring you profitable
returns in good times and in bad.
For more information about RMP call Agricorp [1-888-247-4999].