Canada announces $995 million in transition assistance for farmers

LETHBRIDGE, Alberta, March 22, 2004: Prime Minister Paul Martin and Agriculture and Agri-Food Minister Bob Speller today announced $995 million (note: dollar amounts are Canadian) in assistance for Canadian farmers who face historic financial challenges brought on by circumstances beyond their control. Today's funding will also help producers transition to new business risk management programming.

"The Canadian cattle and beef industry is a real success story, but it has been devastated by extended border closures, which are beyond its control," said Prime Minister Martin. "The government is providing the industry with this much needed assistance to help producers manage until borders are fully reopened."

"Farm income across Canada dropped to historic lows in 2003, affecting all commodities. Canadian farmers face these unprecedented challenges at the same time that they are moving to a new permanent income and disaster assistance program," said Minister Speller. "Today's funding will not only help our cattle producers through a difficult period but also the whole of the agriculture sector, which has weathered a number of shocks and unforeseen events in the last couple of years."

The Transitional Industry Support Program will provide a total of $680 million to cattle producers who have faced a prolonged closure of the Canada-US border. The funding will be delivered as a direct payment of up to $80 per eligible bovine animal on inventory as of December 31, 2003. Eligible animals will include all bovine animals except mature bulls and cows (cows that have calved and intact bulls older than one year). Similar measures will be available for producers of other ruminants who have lost access to the U.S. market.

The program will also provide $250 million to producers of all eligible commodities, including the cattle industry, across Canada. The funding will be delivered as a direct payment to producers based on their past income information and will act as a bridge to the new Canadian Agricultural Income Stabilization (CAIS) program.

A further $65 million is earmarked to cover the federal government's share of the shortfall for the 2002 claim year under the Canadian Farm Income Program (CFIP). CFIP is cost-shared on a 60:40 basis by federal and provincial governments. In the 2002 program year, claims to the program exceeded the amount available, due in large part to drought conditions in western Canada.

The CAIS program is in place across Canada and provides producers with protection from small and large declines in income, including in disaster situations. However, it is a new program, and producers are still in a period of transition as they begin to sign up.

Over the past year, producers have faced many challenges including the closure of export markets to Canadian beef, an appreciation of the Canadian dollar, and consecutive droughts in the prairies, which, along with other factors, have all had a negative impact on farm income. This situation has caused immediate cash flow problems for many producers. Cattle producers are facing a particularly severe situation as borders remain closed following the discovery of a second North American cow with BSE in December 2003.

The investment announced today will provide producers with interim assistance until they are able to take full advantage of the CAIS program.