who will participate in the new brm program ?
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Who Will Participate in the New BRM Program ?. Rakhal Sarker , Shashini Ratnasena and Farzana Enam Rasna Department of Food, Agricultural & Resource Economics University of Guelph October 26, 2012. Introduction. Canada has a long tradition of Safety Net Programs - PowerPoint PPT PresentationTRANSCRIPT
Who Will Participate in the
New BRM Program ?Rakhal Sarker, Shashini Ratnasena and Farzana Enam Rasna
Department of Food, Agricultural & Resource EconomicsUniversity of Guelph
October 26, 2012
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
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Perceived benefits to producers
Participation rate
Key Features: Current vs New BRM Programs
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0%Negative Margin
Tier 3
Tier 1100%
85%
70%Tier 2
Figure 1(a): AgriStability Payment Tiers 2008-2012
Consider two Farms with very different sizes growing Grain & Oilseed in Ontario. Reference Margin
How Does the Current AgriStability Program Work?
Farm 1 Farm 2
Ref. Margin $50,000.00 $1,000,000.00
Current Margin $5,000.00 $100,000.00
Total Loss $45,000.00 $900,000.00
Loss in Tier 3 $30,000.00 $600,000.00
Loss in Tier 2 $7,500.00 $150,000.00
Loss covered under AgriInvest $7,500.00 $150,000.00
Government Share of AgriStability Payment:Tier 3 $24,000.00 $480,000.00
Tier 2 $5,250.00 $105,000.00
Total Payments $29,250.00 $585,000.00
No CoverageReplaced by AgriInvest
80%
60%
70%
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0%Negative Margin
100%
70%
Replaced by AgriInvest (50:50 cost share) & other
private risk mgt. tools
30%Producer
share
AgriStability 70%
Government share
30%Producer
share
70% Government
share
Cost share as current
year margin
declines below
reference margin
Producer’s Reference Margin
Farm 1 Farm 2
Ref. Margin $50,000.00 $1,000,000.00
Current Margin $5,000.00 $100,000.00
Total Loss $45,000.00 $900,000.00
Loss covered under AgriInvest
$15,000.00 $300,000.00
Loss covered under
AgriStability
$30,000.00 $600,000.00
Government Share of AgriStability Payment:
Total Payments $21,000.00 $420,000.00
Consider two Farms with very different sizes growing Grain & Oilseed in Ontario.
Figure 1(b): Cost sharing under AgriStability in Growing Forward agreement 2013-2018
How Will the New AgriStability Program Work?
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ResultsNumber of Farms Qualified/Expected to Qualify to Receive
AgriStability Payments under the Current & New BRM Program Structures
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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%)
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Results- Grain & Oilseed FarmsFigure 2: The Eligibility Rate of Receiving AgriStability Payments under
Current & New BRM Program Structures
Small LargeMedium
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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
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Results- Beef FarmsFigure 3: The Eligibility Rate of Receiving AgriStability Payments under
Current & New BRM Program Structures
Small LargeMedium
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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
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Results- Hog FarmsFigure 4: The Eligibility Rate of Receiving AgriStability Payments under
Current & New BRM Program Structures
Small LargeMedium
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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
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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
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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”
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THANK YOU
Happy to answer any questions
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