FACING THE UNEXPECTED: ENHANCING BUSINESS RISK MANAGEMENT PROGRAMS FOR AGRICULTURE AND AGRI-FOOD BUSINESSES Report of the Standing Committee on Agriculture and Agri-Food Pat Finnigan, Chair NOVEMBER 2020 43rd PARLIAMENT, 2nd SESSION Published under the authority of the Speaker of the House of Commons SPEAKER’S PERMISSION The proceedings of the House of Commons and its Committees are hereby made available to provide greater public access. The parliamentary privilege of the House of Commons to control the publication and broadcast of the proceedings of the House of Commons and its Committees is nonetheless reserved. All copyrights therein are also reserved. Reproduction of the proceedings of the House of Commons and its Committees, in whole or in part and in any medium, is hereby permitted provided that the reproduction is accurate and is not presented as official. This permission does not extend to reproduction, distribution or use for commercial purpose of financial gain. 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Substantive reports on a subject-matter study usually contain a synopsis of the testimony heard, the recommendations made by the committee, as well as the reasons for those recommendations. STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD 43rd PARLIAMENT – 1st SESSION CHAIR Pat Finnigan VICE-CHAIRS John Barlow Yves Perron MEMBERS Lyne Bessette Kody Blois Francis Drouin Neil R. Ellis Richard Lehoux Tim Louis Alistair MacGregor Lianne Rood Gerald Soroka OTHER MEMBERS OF PARLIAMENT WHO PARTICIPATED Caroline Desbiens Philip Lawrence Robert J. Morrissey Alex Ruff Brenda Shanahan Terry Sheehan iii CLERKS OF THE COMMITTEE Aimée Belmore Marc-Olivier Girard Grant McLaughlin LIBRARY OF PARLIAMENT Parliamentary Information and Research Service Corentin Bialais, Analyst Natacha Kramski, Analyst Joanne Markle LaMontagne, Analyst iv STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD 43rd PARLIAMENT – 2nd SESSION CHAIR Pat Finnigan VICE-CHAIRS Lianne Rood Yves Perron MEMBERS Lyne Bessette Kody Blois Francis Drouin Neil R. Ellis Dave Epp Richard Lehoux Tim Louis Alistair MacGregor Warren Steinley OTHER MEMBERS OF PARLIAMENT WHO PARTICIPATED Jaime Battiste Irek Kusmierczyk Terry Sheehan CLERK OF THE COMMITTEE Aimée Belmore v LIBRARY OF PARLIAMENT Parliamentary Information and Research Service Corentin Bialais, Analyst Natacha Kramski, Analyst Joanne Markle LaMontagne, Analyst vi THE STANDING COMMITTEE ON AGRICULTURE AND AGRI-FOOD has the honour to present its FIRST REPORT Pursuant to its mandate under Standing Order 108(2), the Committee has studied Business Risk Management programs and has agreed to report the following: vii TABLE OF CONTENTS SUMMARY .................................................................................................................................................. 1 LIST OF RECOMMENDATIONS .......................................................................................................... 3 FACING THE UNEXPECTED: ENHANCING BUSINESS RISK MANAGEMENT PROGRAMS FOR AGRICULTURE AND AGRI-FOOD BUSINESSES ......................................... 9 Introduction ....................................................................................................................................... 9 Risks in the Agriculture and Agri-Food Sector .................................................................. 10 Risks Affecting Production ................................................................................................ 10 Risks Affecting Demand ...................................................................................................... 11 The COVID-19 Pandemic: A Production and Demand Crisis ................................ 12 The Agricultural Policy Framework ...................................................................................... 13 The Agricultural Policy Framework and the Canadian Agricultural Partnership .............................................................................................................................. 13 The Canadian Agricultural Partnership’s Business Risk Management Programs and their Limitations .............................................................................................. 15 AgriStability ............................................................................................................................. 15 Operation and Participation....................................................................................... 15 Program Limitations ..................................................................................................... 18 Threshold for Triggering Program Payments .............................................. 18 Reference Margin Limit ........................................................................................ 20 Payment Cap ............................................................................................................. 21 Administrative Burden ......................................................................................... 21 AgriInvest ................................................................................................................................. 23 Operation of Program ................................................................................................... 23 Limitations and Recommendations ........................................................................ 24 AgriInsurance and Other Insurance Programs .......................................................... 27 Operation of Programs ................................................................................................. 27 ix AgriInsurance ........................................................................................................... 27 Western Livestock Price Insurance Program ............................................... 27 Limitations and Recommendations ........................................................................ 28 Lack of Livestock Production Insurance in Eastern Canada .................. 29 Limited Insurance Coverage for Horticulture Sector ................................ 31 AgriRecovery ........................................................................................................................... 33 Operation of Program ................................................................................................... 33 Adjustments Related to COVID-19........................................................................... 34 Limitations and Recommendations ........................................................................ 35 Other Federal and Provincial Business Risk Management Initiatives ..................... 36 Federal Risk Management Initiatives ............................................................................ 36 Advance Payments Program ...................................................................................... 36 AgriRisk Initiatives ........................................................................................................ 37 Livestock Tax Deferral Provision ............................................................................. 38 Provincial Risk Management Initiatives ....................................................................... 39 Risk Management Beyond Current Programs ................................................................... 40 Small and Diversified Farm Businesses ........................................................................ 40 Research, Training and Innovation as Risk Management Strategies ................ 42 New Types of Programs for the Future......................................................................... 43 Conclusion ....................................................................................................................................... 46 APPENDIX A LIST OF WITNESSES