Action Plan on Support for Canada's Livestock Sector

Communique Federal-Provincial-Territorial: Agriculture Ministers Announce First Stage in Action Plan on Support for Canada's Livestock Sector

OTTAWA, ONTARIO--(Marketwire - Dec. 19, 2007) - Ministers of Agriculture from federal, provincial and territorial governments have announced the first stage in a national action plan to help with the serious pressures faced by Canada's cattle and hog producers. This first stage was developed after intensive discussions with industry, and is based on support from existing business risk management programs. Ministers committed to accelerate cattle and hog producers' access to these programs and encouraged them to take maximum advantage of the support already available.

Governments are seeking authorities to implement the following programs to provide significant assistance to producers in the short term:

- AgriStability, with interim payments and targeted advances available;

- AgriInvest, including the federal $600 million Kickstart program; and

- an improved Advance Payments Program (APP) (more information below).

Overall, from late 2007 through 2008, nearly $1.5 billion in cash payments will flow to cattle and hog producers through existing programs. In addition, as a result of the changes being introduced by the federal government to the APP, up to $1 billion in additional loans will be available to the livestock sector, bringing the total loans available for the sector through the APP up to $2.3 billion. This enhancement will be particularly helpful to livestock producers who have had low income in recent years. Governments are now working with the producer organizations that deliver the program to ensure these loans are available early in the new year.

Ministers also supported the federal government's plan to defer the collection of interest on Canadian Agricultural Income Stabilization (CAIS) program overpayments until December 31, 2008. This is being done in response to industry requests and applies where the Government of Canada delivers the program, as well as in Alberta, Ontario, and Prince Edward Island.

Ministers also committed that their governments and industry will continue to work together to examine the parameters of existing programs to ensure they continue to work for all stakeholders. In addition to these short term measures, 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.

Ministers will be meeting early in 2008.



Backgrounder

Business Risk Management Programs Available to Assist Livestock Producers in the Short-term

The new Business Risk Management suite has programs that are simple, responsive, predictable and bankable for producers across Canada's agriculture sector. In keeping with Canada's trade obligations they are designed as whole-farm programs that offer producers of various commodities support and assistance when they confront difficult circumstances. Producers in the livestock sector, whether hogs or cattle, can benefit from participating in these programs and are encouraged to contact their administrations to discuss their individual business situations in more detail.

AgriStability

Governments are seeking the authorities to implement AgriStability, which helps producers protect their margins from larger declines. AgriStability replaces the coverage previously available under the Canadian Agricultural Income Stabilization (CAIS) program for margin declines of more than 15 per cent. Producers will receive program payments under AgriStability should their production margins fall below 85 per cent of their reference margins in a given year.

Changes such as enhanced negative margin coverage and inventory valuation were requested by industry and brought about in the transition from CAIS to AgriStability. These changes are helping to ensure programs respond to the situation in the cattle and hog sectors.

How to apply

Producers who participated in CAIS for 2006 should have received an enrolment notice for AgriStability outlining the fee they must pay to participate. To participate, these producers must submit the fee before the December 31, 2007 deadline.

Producers who did not participate in CAIS 2006 can also apply to the new AgriStability program and must submit the fee before the December 31, 2007 deadline.

See the contact information below:

For more information on AgriStability, interim payments and target advances:

- In British Columbia, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Newfoundland and Labrador and the Yukon Territory, call 1-866-367-8506.

- In Alberta, call 1-877-744-7900.

- In Ontario, call 1-877-838-5144.

- In Quebec, call 1-800-749-3646.

- In Prince Edward Island, call 902-620-3091.

Interim Payments

Interim Payments provide producers with earlier access to a portion of their 2007 final payment. Interim Payments provide 50 per cent of a participant's estimated final payment, based on information they provide.

How to apply

The 2007 Interim Application is a simple two-page form, which can be requested by calling one of the numbers above. More information is also available at www.agr.gc.ca and an online calculator is available to help producers determine how much they may be eligible to receive.

Targeted Advance Payments

Manitoba, Nova Scotia, New Brunswick, and Alberta have targeted advances available to hog producers. Saskatchewan is also in the process of putting them in place. Through targeted advances, provincial governments proactively offer advances using benchmarks to determine the impact of a situation on an individual's farm. The advances provide producers with a portion of their estimated 2007 AgriStability benefit.

How to apply

The targeted advance is simple and quick. Producers in participating provinces are informed by letter of the estimated 2007 advance to which they are entitled. To receive a payment, they simply have to sign and return the letter. More information is also available by calling one of the numbers above.

The Advance Payments Program

The Advance Payments Program (APP) is a financial loan guarantee program that gives producers easier access to credit through cash advances which means improved cash flow throughout the year and better opportunities for marketing their agricultural products. The limit on cash advances is $400,000, with the first $100,000 being interest free. Producers have up to 18 months to repay the advances.

In response to the need for more credit under the APP, changes will be implemented in early 2008 to add negative margin coverage under AgriStability as security for the APP. This will make additional loans available to producers - particularly those who have experienced back to back losses over the past few years.

How to apply

Cash advances are issued by producer organizations on behalf of Agriculture and Agri-Food Canada. A list of these organizations is available at www.agr.gc.ca/app or by calling 1-888-346-2511.

AgriInvest

Governments are seeking authorities to implement AgriInvest, which replaces the coverage previously available under CAIS for margin declines of 15 per cent or less.

Each year, producers who make a deposit into an AgriInvest account will receive matching contributions from federal and provincial governments. Producers will have the flexibility to use the funds to cover small margin declines, for risk mitigation or other investments.

More details on how AgriInvest will be delivered will be available once authorities are in place.

Kickstart

To assist producers in the transition to the new suite of business risk management programs, the Government of Canada has announced a $600 million investment to kickstart the AgriInvest accounts.

Once AgriInvest authorities are in place, producers will receive a letter informing them of the amount of their Kickstart benefit. In all provinces and territories except Quebec, the $600 million is being delivered by the federal government.

To be eligible, producers must have farmed in 2007 and must commit to participating in AgriInvest for the 2007 program year. Producers do not have to make a deposit to their AgriInvest accounts to withdraw their Kickstart funds.

Further details on Kickstart will be available once AgriInvest authorities are in place.

Other Measures

Deferral of Interest on CAIS Overpayments

To help address the issues facing the livestock sector and in response to requests from industry, collection of interest on CAIS overpayments will continue to be deferred until December 31, 2008. This applies in provinces and territories where Canada delivers the program (British Columbia, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Newfoundland and Labrador and the Yukon). It also applies in Alberta, Ontario and Prince Edward Island.