For this article I have my farmer hat firmly in place. I have no credentials in agriculture economics or farm policy so take it for what it is.
Many years ago I remember sitting in a University of Saskatchewan lecture theatre at a then Farm and Home Week program. The minister of the day had sent out a bureaucrat to unveil two major programs: GRIP (Gross Revenue Insurance Program) and NISA (Net Income Stabilization Program). GRIP was too rich and the government had to kill it before too long. NISA was not that expensive so it stayed around. Along with NISA came CAIS (Canadian Agriculture Income Stabilization). CAIS, it turns out, was a real basket case.
Then a new government came along and changed the name of CAIS to AgriStability and the name of NISA to AgriInvest. AgriStability is based on margin and requires a lot of complicated accounting, which is fine for accountants. But I ask, how can we set up a margin program in an industry that is not a margin business?
We are price takers, not price setters. We do not grow grain, calculate the cost of production and then set the price to provide a margin. Mind you, some farmers have done very well in certain cycles with CAIS and AgriStability. If one goes into these programs with a very rich reference margin and crop yields and/or prices tank there can be some big payouts.
But what about the farmer who enters after having suffered several challenging years? There is no profitable reference margin to maintain. So, it is hard for this old stubble jumper to see how that is a useful program. I have never been in it because I have no desire to play that game.
But NISA , and now AgriInvest is another matter. It is a very good farm program but the administration is cumbersome. My 2009 business was not completed until late 2010. I took part in NISA and am now in AgriInvest. One would have to be financially illiterate not to. Where else can I get an immediate 100 per cent return on investment, guaranteed? It is a very good savings/retirement fund program. When NISA was changed to AgriInvest the cumbersome triggers were removed and a farmer can withdraw whatever amount whenever heor she wants to.
But the problem with AgriInvest is that we really do not need it. Several years ago when grain prices were low and farmers were struggling, the ag minister of the day could not figure out why there was such a big stash of money in NISA but few were accessing it. Wake up! Farmers with the maximum in NISA were not in trouble then, never were and never will be. So, we do not really need it.
The program that is a winner is crop insurance. It is flexible, responsive, easy to understand and I think serves us well. As experience is gained and high yields are maintained the coverage goes up and premiums go down. As well, AgriRecovery has a role.
For my money, we need a responsive crop insurance program and some way to deal with disasters that are above and beyond natural weather fluctuations (like AgriRecovery). And, when the need arises the money should be paid out simply by the acre. 2010 was a case in point — as I understand it $30 an acre was added to unseeded acres. Governments
have really responded to real disasters on many occasions.
Do we really know what all the programs cost? When I have mentioned that all programs should be waxed except for crop insurance and disaster relief — it was quickly pointed out that too many bureaucrats would be out of a job. Hmmm.
Anyway, that is my take on the matter. As is always the case in farming there will be many that think I am out to lunch. That is the beauty of being a farmer — put 10 of us in a room and we have trouble agreeing on the day of the week. But, then again, independent thinking is what farming is all about.
J.L.(Les)Henryisaformerprofessorand extensionspecialistattheUniversityof Saskatchewan.HefarmsatDundurn,Sask.He recentlyfinishedasecondprintingof“Henry’s HandbookofSoilandWater”,abookthat mixesthebasicsandpracticalaspectsof soil,fertilizerandfarming.Leswillcoverthe shippingandGSTforGrainewsreaders.Simply sendachequefor$50toHenryPerspectives, 143TuckerCres,Saskatoon,SK,S7H3H7,and hewilldispatchasignedbookposte-haste
We need some way to deal with disasters that are above and beyond natural weather fluctuations