Future Participation in Ontario's New BRM Program

1. Who Will Participate in the New BRM Program ? RakhalSarker, ShashiniRatnasena and FarzanaEnamRasna Department of Food, Agricultural & Resource Economics University of Guelph October 26, 2012

2. Introduction • Canada has a long tradition of Safety Net Programs • Originally designed to protect the income of efficient producers • The design & richness of the programs changed through time to accommodate changing needs of the agri-food sector • ASA (1958) ASA(1975) FIPA(1991) GRIP & NISA • APF CAIS • GF1 BRM- AgriStability • GF2 BRM2-AgriStability (R) • Richness of the program • More producers participate, the higher the sample size for relevant data Participation rate Perceived benefits to producers

3. Key Features: Current vs New BRM Programs

4. Figure 1(a): AgriStability Payment Tiers 2008-2012 How Does the Current AgriStability Program Work? Consider two Farms with very different sizes growing Grain & Oilseed in Ontario. Reference Margin 100% 70% Tier 1 85% Tier 2 70% Tier 3 0% Negative Margin

5. Figure 1(b): Cost sharing under AgriStability in Growing Forward agreement 2013-2018 How Will the New AgriStability Program Work? Consider two Farms with very different sizes growing Grain & Oilseed in Ontario. 100% Producer’s Reference Margin Cost share as current year margin declines below reference margin 70% 0% Negative Margin

6. Results Number of Farms Qualified/Expected to Qualify to Receive AgriStability Payments under the Current & New BRM Program Structures

7. Results • In aggregate, fewer farms will qualify for the new BRM program payments in Ontario. The rate of decline, however, will vary across sectors. • The largest drop is expected in the grain & oilseeds sector (37.3%) • The second largest in beef (14%) • The smallest drop will be in Hog sector (13%)

8. Results- Grain & Oilseed Farms Figure 2: The Eligibility Rate of Receiving AgriStability Payments under Current & New BRM Program Structures Large Small Medium

9. Results: Farms’ Participation in Current & New BRM Programs- Grain & Oilseed Sector • Considering the size categories, the largest adjustment will take place in hobby, small, large & very large grain & oilseed producers

10. Results- Beef Farms Figure 3: The Eligibility Rate of Receiving AgriStability Payments under Current & New BRM Program Structures Large Small Medium

11. Results: Farms’ Participation in Current & New BRM Programs- Beef Sector • Most of the drops will take place in small sized farms • The medium & large sized farms will be relatively less affected by BRM2

12. Results- Hog Farms Figure 4: The Eligibility Rate of Receiving AgriStability Payments under Current & New BRM Program Structures Large Small Medium

13. Results: Farms’ Participation in Current & New BRM Programs- Hog Sector • Since hobby farms practically disappeared from the hog sector, the new BRM program will not have any impact on these farms • All other hog farms are likely to be less affected by the new BRM program

14. Concluding Remarks • Fewer farms will participate in the new BRM program • The extent of drop varies widely across sectors • Grain & oilseeds sector will be affected more than beef or hog sectors in Ontario • Hobby, small, large & very large farms will be more influenced than the mid-sized farms • Beef & hog sectors, the drops will be small among mid-sized and large farms

15. Concluding Remarks • Only a few large farms will participate • Will limit agencies’ ability to receive readily available data from the growing & increasingly more relevant segment of Ontario agriculture “Past is not always a good predictor of the future”

16. Happy to answer any questions Thank you