Keeping Risk Management a Priority
By Ontario Federation of Agriculture
Keeping risk management a priority
High commodity prices put the Risk Management Program at risk despite farmers' initial struggle to get it implemented. Producers may not see the value in paying the premium for the program with the current prices. However, it is important to look beyond the current boom period.
April 28, 2008
A lot of Ontario farmers will recall the lengthy struggle involved in getting provincial government approval for a Risk Management Program. For almost three years farmers and their organizations took the proposal to government officials in one form or another.
OMAFRA Minister Dombrowsky recognized the need and announced a pilot Risk Management Program that met most of the needs identified by the farming sector.
This announcement set a tremendous precedent for all of Ontario agriculture in adopting a cost-based safety net. The RMP paves the way for other like-minded commodities
A lot has changed for the grains and oilseeds sector since the start of the campaign; most obvious is the increase in the prices farmers can get for the grains and beans today. The objective of the Risk Management Program was to provide a cushion for price depressions, but now the risk of a price depression seems more remote for crop producers.
This change in circumstances may have the effect of jeopardizing support for the Risk Management Program. Crops producers may not see merit in paying a premium when prospects for high prices seem so strong.
In an effort to help crop producers look at the long term possibilities for their commodities, Ontario’s grains and oilseeds organizations are advertising, asking “What does your next five years look like?”
Farmers need to look well beyond the current boom period. If the Risk Management Program doesn’t have continued support from the farmers of Ontario, it may not be around for the next period of low prices. As the advertising points out, ‘once you’re out, you’re out’ meaning if you fail to continue your participation this year because of the good prices, you may not have the RMP when you next need it – it is renewable every three years.
To make it easier for farmers to justify staying in the program when times are good, as they are now, there are four levels of protection available. Paying the premium for the lowest level of protection is all that’s required to stay with the RMP. When the need is expected to be greater, all the farmer would need to do is enrol in one of the higher protection levels.
The term ‘risk management’ tells us we’re looking at ways of best managing types of risk that come from beyond our farm – international growing conditions and market influences. Situations on our farms can be better anticipated, and for weather conditions we have crop insurance.
Our federal government has made it clear it doesn’t want any part of funding companion programs in Ontario. To make up for that, we’ve been able to design AgriFlex and the national government is being lobbied to participate in that program – it allows Ottawa to maintain its priority of equitable treatment across Canada’s diverse agricultural regions and sectors.
AgriFlex will allow the province to access federal funds and use them more more appropriately in Ontario. That’s how our organizations envision using federal dollars for programs like our RMP.
However, to be able to do that, there needs to be proof that Ontario growers want, need and support RMP. Maintaining your enrolment in the program with premium payment is the best way to demonstrate that evidence.
This seems like an ideal time to stay with the RMP – good prices and low premiums.
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