Farm-Scape, Episode 2084

Livestock producers in Manitoba and Saskatchewan are urging federal agriculture minister Chuck Strahl to change provisions of the Grains and Oilseeds Payment Program (GOPP) that they believe penalize diversified farming operations.

The $755 million Grains and Oilseeds Payment Program is designed to assist grain, oilseed and special crops producers caught in the crossfire of international subsidy battles by providing payments based on average net sales of eligible grains. The program was announced by the former Liberal government just prior to the federal election and the new Conservative government is now fast tracking payments.

Exclusion of Fed Grains and Eligibility Reductions for Feed Purchases-Key Concerns

The chief concerns among livestock producers revolve around the program’s exclusion of fed grains and a provision under which 65 percent of the value of feed purchased for livestock is deducted from the farm's eligible grain sales.

According to Agriculture and Agrifood Canada (AAFC), “The Grains and Oilseeds Payment Program is designed to assist producers in responding to the impacts of a long term decline in grains and oilseeds prices. In order to be compensated under the program, a producer must have sold product into the markets that have suffered this long-term decline.“

The agriculture department also indicates, “The GOPP is intended for farms whose business is the commercial production of grains, oilseeds, and special crops. Commodities produced on farm and fed to livestock are not eligible, as they are not sold commercially. To ensure that producers who purchase feed are treated in a similar manner, purchases of prepared feed are removed from the sales revenue used as the basis for payment.“

Diversified Farmers Penalized

“Again we feel that the diversified farmers are really being penalized,“ states Manitoba Pork Council (MPC) chairman Karl Kynoch. “Over the past years the government has really encouraged farmers to go into diversified farming. What's happening with this $755 million Grains and Oilseeds Payment Program is that they’re excluding farm fed grains again.“

They’ve done this in the past but, this time, they’ve even taken this one step farther. They’re actually deducting – if you’re a hog farmer and you produce grains and if you’ve bought any prepared feeds – they’re taking 65 percent of the value of the prepared feeds and also deducting that off of your grain sales. This, we feel, is very unfair.“

“I am puzzled that a government that actively encourages farm diversification would pick the pockets of farmers who follow their advice,“ he adds.

Program Criteria Sends Mixed Message

“I think there’s a real mixed message in terms of the message that is out there for the diversification of the farm community from the grains and oilseed sector into livestock,“ says Sask Pork general manager Neil Ketilson.

He explains, “Anytime there’s a government program that sends a signal that, by producing livestock, you’re somehow penalized in terms of what you receive from your grain operation that is indeed unfortunate.“

Ketilson suggests, “It’s counterproductive to the diversification. When an individual producer out there is producing both grains as well as livestock and, because of his livestock production and his purchase of feedgrains, it reduces any potential benefits he could have gotten from government assistance on the grain side, then that producer would really question why he was doing both.“

He insists, “It really sends a mixed message and a message that I think is inconsistent with the objectives that we have enunciated time and time again in trying to diversify the province into more value added production of livestock.“

Diversified Farmers Suffer for Following Government Advice

The Manitoba Cattle Producers Association (MCPA) is equally concerned with the exclusion of fed grains. “For years, governments have been encouraging producers to diversify their operations,“ states MCPA president Ken Crockatt. “Yet in turn, we’re being penalized for adding value to our product.“

He suggests, “This situation is just another telling example of the ongoing problems the agriculture sector is experiencing with the existing safety net programs.“

MCPA past-president Larry Schweitzer continues, “Some of these producers have diversified and brought livestock on board and value added their products right on their farm and now they’re being penalized for doing that.“

He explains, “There’s numerous livestock divisions, whether it be cattle or hogs or turkeys or chickens or what ever the case may be, where they use their own farm products in their own production of the livestock and all of those products are ineligible for the program so we just want to have them eligible.“

Opportunity to Encourage Diversification Ignored

Ketilson agrees, “The program tells them [diversified farmers], even though they’ve done their bit to diversify, they are somehow not treated equally with the grain farm.“

“We think that is totally counterproductive to the emphasis and the objectives that we’ve tried to instill in the agricultural community. That’s one of diversification and value added and getting more value out of the grains that they produce on farm,“ he says.

“We think it’s a missed opportunity to send a signal to have producers really diversify into more livestock in western Canada, especially Saskatchewan, and produce hogs or cattle,“ he adds.

Diversified Producers Caught in the Middle

Kynoch notes, “If you’re a straight grain farmer and lost money this year you get some help with assistance. If you’re a straight hog farmer you’ve made money in the past year. But, if you’re a diversified farm into both hogs and grain, they’re forcing that diversified farmer to take the profits off his hog operation and help cover the losses in the grain operation. Again, the diversified farmer is being heavily penalized in this situation.“

“What they’re doing is basically forcing a diversified farmer to take the profits that he made in his livestock and use those profits to cover the grain operation.“

Kynoch argues, “What they need to do is include the farm fed grains that producers have raised and made into feed to feed their pigs and also not deduct the cost of prepared feeds.“

He stresses, “That grain operation and that livestock operation are two separate entities and they need to be treated that way. What they need to do is, somehow, get the farm fed grains back into the formula for the payout.“

Government Encouraged to Level the Playing Field

Schweitzer continues, “We would like to have the farm fed grains included in the payments just to have a level playing field. The money that was put into diversification to use your products on farm and to value add your products on farm are the ones being subtracted here out of the equation right now and we don’t think that's fair.“

Crockatt is convinced, “This change would be very well received by our producers.“

Ketilson stresses, “If you don’t treat them [diversified farmers] equally then what happens is anybody that is in livestock production says, why in the world would I do that when I’m going to be disadvantaged by it.“

He notes, “We believe there's a whole bunch of other reasons to be involved in livestock and it’s a net benefit over and above any government payments you’d get. But the message that the federal government is sending, in treating these people unequally, is the issue that I think needs to be addressed.“

Farmscape Staff