Not all farmers benefit equally from some of the programs in place, says Bonnie Lysyk
By Diego Flammini
Some of Ontario’s programs designed to support farmers fail to do so properly, according to Bonnie Lysyk, Ontario’s Auditor General.
“Given the importance of Ontario’s agricultural sector, it is crucial that all farm-support programs including the Ontario Risk Management Program, AgriStability and AgriInvest – provide effective and timely assistance to Ontario’s 50,000 farms when they need it,” she said at Queen’s Park yesterday.
Lysyk discovered two issues with the province’s $100-million-per-year Ontario Risk Management Program, as outlined in in her 2017 Annual Report.
One discrepancy with the program is that it’s designed to make payments based on production costs, meaning larger operations with greater economies of scale receive more substantial payments.
“One hog farmer received $827,000 in 2015,” the report says. “The farm’s actual production cost was $36.4 million but the farmer received payment based on the industry-average cost of $66.3 million. If payment was based on the farm’s actual production cost, the farmer would have received no payment.”
Another issue with the risk management program is that it fails to take each case into account.
Farmers received an average of $11,000 each between 2011 and 2015. Only half of the farmers who received payments, however, reported a loss or a decrease in income during the year they received this payment.
And in some cases, farmers even received payments in years where their incomes increased.
“We found that 30 per cent of payment recipients (from 2011 to 2015) actually reported higher income in the year they received assistance than the year before,” Lysyk’s report says.
The Auditor General also uncovered three issues with Ontario’s AgriStability program.
The first issue is a declining participation rate, which Lysyk estimates has fallen by 50 per cent in the last 10 years.
The second is that the amount of support a farmer receives from the AgriStability program can change depending on the type of operation.
“Of the over 21,000 grains and oilseed farmers’ applications for AgriStability from 2013 to 2015, 10 per cent actually triggered payments, compared to 21 per cent of cattle farmers’ applications, despite more gains and oilseed farmers experiencing large declines in their net income over the same period,” the report says.
And changes to AgriStability in 2013 lowered the coverage and payments for farmers.
The changes were meant to provide support for producers facing “disaster-level income declines,” according to the Auditor General’s report. But some of the changes have resulted in farmers receiving lower payments than they should or, in some cases, no payment at all.
The Auditor General did find one farm support program that is working successfully.
“Production Insurance appears to help most crop farmers manage production losses by allowing farmers to select the level of coverage and receive payments in the same year they incur the loss,” Lysyk’s report says.
Other report findings suggest one of Agricorp’s four main IT systems is almost 30 years old while another is more than 10 years old. The aged technology has led to 31 system-related errors that have resulted in farmers receiving incorrect information or wrong payments, the report concluded.
Jeff Leal, Minister of Agriculture, Food and Rural Affairs, released a statement following the release of the Auditor General’s report.
"I would like to thank the Auditor General for her report,” he said in his statement. “We agree it's important that Ontario's hard-working farmers are treated equitably and have the confidence they need to invest in innovation and growth when faced with unpredictable weather and other factors beyond their control.”
Farm policy makers have already taken steps to improve the producer support programs.
In 2016, ministers from all three levels of government committed to reviewing farm business risk management programs. And earlier this year, Ontario championed a national review of business risk management programs, including a focus on AgriStability, Minister Leal said in his statement.
Top photo: Bonnie Lysyk, Ontario's Auditor General
Photo: Richard J. Brennan/Toronto Star