Study on risk management in EU agriculture : case study 8 : what could EU policymakers learn from agricultural risk management institutions available in Canada?

In the past, Canada had a plethora of agricultural programs that ranged from transportation subsidies to state trading and various regular and ad hoc income support programs. Transportation programs benefitted crop and livestock producers, but distorted the location of livestock raising. Various regular and ad hoc programs were designed to provide subsidies to crop producers when prices fell. Single-desk selling of grain crops through the Canadian Wheat Board ensured producers received the same average prices, although prices might have been lower than otherwise due to questionable marketing practices. Protection for livestock producers varies by province and programs have generally been ad hoc. Supply-restricting marketing boards protected producers in the dairy, egg and poultry sectors. With the exception of the latter, the government abandoned all forms of protection in favour of a suite of agricultural business risk management (BRM) programs. These are as follows: 1. AgriInvest is a government-matched, tax-free savings account that addresses 'shallow' losses. Each year a producer can deposit up to 1.5% of their Allowable Net Sales (ANS) into the AgriInvest account, with 1% matched by a government contribution up to USB 15,000. The account balance is limited to 400% of a producer's average ANS; 2. AgriStability is a margin-based, whole-farm program that provides 'deep' protection. Indemnities are based on the difference between the realized gross margin in any year and a reference historical margin, with payments triggered when a producer's realized gross margin falls 70% or more below the reference margin. The producer then receives an indemnity equal to 70% of the difference between realized income and the trigger margin; 3. AgriRecovery provides disaster relief, covering risks not covered by other programs. It is an ad hoc disaster-relief program offered by the federal and provincial governments to assist producers with extraordinary costs of recovering from natural disasters; 4. AgriInsurance provides crop-specific yield protection; it is an extension of subsidised multi-peril crop insurance that has been available since 1959, although the range of products covered has increased over time. It does not cover livestock producers although they can insure their on-farm feed production. The subsidy rate is 60% with the federal and provincial governments sharing this cost and the federal government paying for the administrative and operating costs.