Agriculture and Agri-Food Canada

Agriculture and Agri-Food Canada

March 29, 2005 10:11 ET

AAFC: Government of Canada Announces $1 Billion for Canadian Farmers to Ease Cash-Flow Pressures, Set Stage for Transforming Industry



MARCH 29, 2005 - 10:11 ET

AAFC: Government of Canada Announces $1 Billion for
Canadian Farmers to Ease Cash-Flow Pressures, Set
Stage for Transforming Industry

GUELPH, ONTARIO--(CCNMatthews - March 29, 2005) - Agriculture and
Agri-Food Minister Andy Mitchell today announced $1 billion in immediate
federal assistance for cash-strapped Canadian farmers facing record low
farm incomes as the first step in an aggressive all-out effort to
restructure the national agriculture and agri-food industry and bring
profitability back to one of Canada's most important sectors. Minister
Mitchell was joined today in Guelph by Brenda Chamberlain, Member of
Parliament for Guelph and other Members of Parliament.

The Farm Income Payment Program will begin delivering the money in April
as part of a two-part plan to ease immediate financial pressures on
farmers and allow for a transformation of the industry that addresses
the root causes of declining farm income.

Minister Mitchell noted that agriculture is a shared federal/provincial
jurisdiction and called on the provinces to match today's announced
initiative on a 60/40 basis. In the meantime, he said the Government of
Canada is making this money available immediately to address the severe
financial hurt in the sector.

"At a time when the marketplace is demanding bold innovation, farmers
across Canada have been devastated by some of the most difficult years
ever faced by the industry," said Minister Mitchell. "We need to
immediately provide some stability to producers, across all sectors, and
to move forward in a transforming way, which will take us beyond this
frustrating cycle of crisis."

Transformation is already underway in Canada's cattle and ruminant
industry. The Government of Canada announced the Repositioning
Livestock Industry Strategy last September to develop a stronger
industry that was less dependent on a single market and would also keep
more value-added profit at home. That strategy is already leading to
more processing capacity in Canada and is even more important now with
the continued closure of the American border to Canadian live cattle and
other ruminants.

The $1 billion Farm Income Payment Program will supplement current
federal, provincial and territorial agriculture programs that last year
paid out a record $4.9 billion to farmers. The program will provide
assistance to all sectors but will be of greatest benefit to two of the
most affected, cattle and other ruminants and grains and oilseeds.

The Farm Income Payment Program includes a general payment of $841.5
million for all eligible Canadian producers. About 55 per cent of that
payment is expected to go to grains and oilseeds producers. Cattle and
ruminant producers will receive about 18 per cent of that payment.

In addition to their share of that payment, cattle and ruminant
producers will also receive $155 million in direct payments based on
their inventory as of December 23, 2003 to deal with the income
pressures created by the ongoing closure of a number of borders to
Canadian live cattle and other ruminants.

The Farm Income Payment Program will be based on the same eligibility
criteria used for last year's Transitional Industry Support Program
(TISP), which provided $930 million in federal funds to help farmers
deal with income pressures. Farmers who participated in TISP will
automatically receive a payment under the Farm Income Payment Program.
They will not need to apply.

Producers who were eligible for TISP but didn't apply can receive a
payment under the Farm Income Payment Program. A guide and an
application form for the Farm Income Payment Program will be available
in the near future.

"This announcement comes at a crucial time for Canadian producers,
particularly in the grains and oilseeds, ruminant, and horticulture
sectors," said Bob Friesen, President of the Canadian Federation of
Agriculture. "It is an important first step in helping to move producers
past current challenges."

"Maintaining cash flow is critical for livestock and ruminant sectors as
we wait for the re-opening of the American border and as we work with
governments to reposition our sectors to recover from the current crisis
and build a strong and more resilient industry for the future," said
Canadian Cattlemen's Association President Stan Eby.

Today's announcement follows on a series of program initiatives and
investments in the industry since 2003, including:

- $2.6 billion in federal, provincial and territorial funding to assist
the cattle and ruminant industry in the wake of the discovery of BSE in
Canada, including a federal investment of $488 million for Canada's
Repositioning the Livestock Industry Strategy;

- a $50 million federal contribution to the Canadian Cattlemen's
Association's Legacy Fund to launch an aggressive marketing campaign to
reclaim and expand markets for Canadian beef;

- modifications to Canada's key agricultural business risk management
program, the Canadian Agricultural Income Stabilization (CAIS) Program,
allowing it pay out more than $1.2 billion in its first 15 months to
producers hurt by drought, the impact of BSE, the Avian flu epidemic and
the decline in many commodity prices;

- an estimated $892 million in payments for the 2004 crop year under
Production Insurance to help farmers deal with weather-related losses;

- $930 million under the Transitional Industry Support Program to help
farmers with income pressures and move to new business risk management

- $104 million in new federal funding to expand cash advance programs to
include livestock, allowing farmers to hold on to their products to
avoid lower prices created by market oversupply. In 2004, spring and
fall cash advances made $1.2 billion available to Canadian farmers, with
interest costs of over $12 million paid by the federal government.

Recently, Minister Mitchell announced a further adjustment to allow
producers who had deposited more than the required minimum deposit in
CAIS to withdraw the excess funds in their accounts. The change will
make significant funds available immediately, including more than $117
million available to the approximately 14,000 producers in the provinces
where the Government of Canada administers the program.

For more information on the Farm Income Payment Program, visit
Agriculture and Agri-Food Canada's Web site at or call


Contact Information

    Minister Mitchell's Office
    Elizabeth Whiting
    Press Secretary
    (613) 759-1059
    Agriculture and Agri-Food Canada, Ottawa
    Media Relations
    (613) 759-7972
    (866) 345-7972 Toll-free