Agriculture and Agri-Food Canada

Agriculture and Agri-Food Canada

February 25, 2008 16:22 ET

Government of Canada Improves Support Programs for Farmers

OTTAWA, ONTARIO--(Marketwire - Feb. 25, 2008) - The Government of Canada is working hard to deliver real help for struggling farm families who are weathering short-term storms and adjusting to new market realities. The Honourable Gerry Ritz, Minister of Agriculture and Agri-food and Minister for the Canadian Wheat Board, today introduced proposed amendments to the Agricultural Marketing Products Act (AMPA) which will give Canadian producers better access to cash advances as they make important business decisions.

"This Government has worked closely with producer groups to specifically target help to sectors facing severe challenges," said Minister Ritz. "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."

"When Canadian farm families face these downturns, this Government is backing them up with solid support to get them back on their feet to compete in the global marketplace."

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.

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, the Government will work with industry and review meat inspection user fees to assess their impact on competitiveness of the sector.

As well, the Government of Canada 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.

The Government 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.

BACKGROUNDER

NEW FEDERAL MEASURES TO HELP LIVESTOCK PRODUCERS

Amendments to the Agricultural Marketing Products Act (AMPA)
The Advance Payments Program (APP) is delivered under AMPA. Cash advances under the APP help producers with cash flow by giving them the flexibility to keep their products and sell them when market conditions are favourable. APP cash advance limits are $400,000 and up to $100,000 is available interest-free.

The following changes are proposed to the APP to make it easier for producers to access cash 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.

Advances to hog producers will be based on the number of animals they expect to raise for sale for a 12 month period. The repayment period will start one year after the producer has received the advance and must be repaid within the production period to be determined under the Advance Payments Program.

When these program changes are implemented, producers will have quicker and easier access to $3.3 billion in repayable advances. Taken together, program improvements made in December and proposed changes to AMPA represent significant changes to advance payments. If all livestock producers take full advantage of the program, an estimated $3.3 billion in repayable advances will be available.

To get advance payments to producers quickly, the collaboration of all political parties will be required to agree to quick passage of AMPA amendments.

The APP is delivered by producer organizations on behalf of Agriculture and Agri-Food Canada. Producers must contact producer organizations directly to apply.

For more information, producers can call 1-888-346-2511 or check the program web site at www.agr.gc.ca/app.

Cull Breeding Swine Program

The Cull Breeding Swine Program will help restructure the industry to bring it in line with market realities. The objective is to reduce the national breeding herd size by up to 10 per cent over and above normal annual reductions to more accurately reflect market conditions.

The program will be delivered by the Canadian Pork Council (CPC). Key components of the program are as follows:

- Producers are eligible to receive a per head payment for each animal slaughtered, as well as reimbursement for slaughter and disposal costs.

- Producers must agree to empty at least one barn, and to not restock for a three year period.

- Animals must be slaughtered in a humane manner and disposed of in compliance with jurisdictional environmental requirements.

Increased input costs and a strong Canadian dollar have resulted in ongoing losses in the hog sector. This measure will assist producers planning to exit the industry or permanently downsize their operations.

Information on this program will be provided to producers by the CPC as further details become available.

Review of User Fees

In addition, over the next two weeks, the Government will work with industry and review meat inspection user fees to assess their impact on competitiveness of the sector.

Costs of Feed Ban Implementation

As well, the Government of Canada is working to reduce costs and increase competitiveness under Canada's enhanced feedban. This complements the federal government's commitment of $80 million to help the industry adjust to new feed standards.

BACKGROUNDER

SUPPORT FOR THE LIVESTOCK SECTOR

Federal and provincial governments are taking a number of steps under a national action plan to help the livestock sector, including today's measures and working through improved business risk management programs to give the livestock sector more responsive, predictable and bankable support.

Action for the Livestock Industry

- From late 2007 through 2008, nearly $1.5 billion in cash payments will flow to cattle and hog producers through improved risk management programs.

- In addition, as a result of previous changes introduced by the federal government to the Advance Payments Program (APP), additional loans are available to the livestock sector, bringing the total loans available for the sector through the APP up to $3.3 billion.

- The amendments to the Agricultural Marketing Programs Act introduced on February 25, 2008, will give livestock producers faster and easier access to these loans.

AgriStability

- AgriStability helps producers protect their margins from large declines.

- This Government acted on industry requests for changes such as enhanced negative margin coverage and inventory valuation. These changes have made AgriStability more responsive to difficult situations such as the livestock industry currently faces.

- Interim Payments are in place to provide livestock producers with earlier access to a portion of their 2007 final payment.

- Saskatchewan, Manitoba, Nova Scotia, New Brunswick, and Alberta have made targeted advances available to hog producers, to give them access to a portion of their estimated 2007 AgriStability benefit.

AgriInvest Kickstart

- To help producers manage the risks they face, the Government of Canada is delivering $600 million to farmers through AgriInvest accounts. Livestock and other producers can access these funds immediately.

The Advance Payments Program (APP) Working for Livestock Producers

- The APP is a financial loan guarantee program that gives producers easier access to credit through cash advances that improve their cash flow throughout the year.

- In response to requests from industry, proposed amendments to the APP have been tabled today which would allow livestock producers to use inventory as security for cash advances rather than requiring them to use a Business Risk Management program as security.

- The amendments also boost the funds available under emergency advances from $25,000 to $400,000 under more favourable security conditions, when a sector faces the kind of severe economic conditions that the livestock industry is currently struggling with.

Ongoing Work with the Industry

- The Government continues to work closely with industry to help cattle and hog producers weather this nearly perfect economic storm.

- In addition, governments are working with industry representatives to find ways of helping industry position itself to be competitive in the long term.

- These measures include enhancing market access efforts, reducing the regulatory burden, and examining means to reduce the cost of the feed ban implementation.

Contact Information

  • Agriculture and Agri-Food Canada
    Ottawa, Ontario
    Media Relations
    613-759-7972
    1-866-345-7972
    or
    Office of the Honourable Gerry Ritz
    Margaux Stastny
    Press Secretary
    613-759-1059