CAIS Is Still Here: CAIS Inventory Transition Initiative (CITI) Payments

You might remember when I wrote these words in the last January 23rd Agridome.  “Political change also means putting the past agricultural mistakes behind you.  Forget CAIS.  Forget APF. Forget it all.  Its now up to the Conservatives to put together an agricultural policy that works.”

Fast forward to May 2006.  Surprise, surprise, surprise, CAIS is still with us and in fact is being re-jigged by adjusting inventory valuations retroactively for 2003, 2004 and 2005.  Funding is capped at $900 million with farmers who are in the CAIS program in line to receive a CAIS Inventory Transition Initiative (CITI) payment.  In other words, even after the inventory re-evaluation farmers will receive cents on the dollar.  There will be no wholesale stabilization payment from this to cover up past CAIS injustices.

CAIS was always bad to the bone.  Your loyal scribe had nothing good to say about it.  Stephen Harper was right when he said he would scrap it on a Chatham farm in December 2005.  He was right.  My readers and listeners would be horrified to know how inept CAIS really was at stabilizing farm revenues.

I’m sure as my readers you’d be interested in knowing (or perhaps alarmed) at how much your losses were not covered by CAIS because of the valuation of inventory at the same price per bushel for opening and closing inventory.

Soybeans are a good example because the Ontario average price for soybeans was recorded at $9.74 a bushel at the end of 2003 and at $6.12 at the end of 2004. A farmer with 10,000 bushels of soybeans at the beginning and end of 2004 lost $3.62 per bushel or $36,200, which was not recognized as a loss by CAIS because it was “unrealized”.  My understanding of the new re-jigged CAIS adjustment proposal is to correct this shortfall with the 900 million dollars.

Right now all of this is just a theory.  In my opinion nobody will be receiving a dime “before the snow flies”.  I’ve been wrong before, just look at the first paragraph of this column.  I’d thought the Conservatives would throw CAIS away, as they should have.  No dice.  They have broken that promise.

They might have broken that promise but you cannot deny they’ve done much better than the past Liberal administrations.  Chuck Strahl has promised to work with the provinces for something better.  Many of them threw their lot in the APF, which caused many of our current problems.  So it’s a bit like George Washington negotiating with 10 Benedict Arnold’s.  Any political pressure should be applied squarely on provincial governments.

So have farmers made progress by rallying last winter?  Some of you might chafe at these gains, but gains they are.  We are still millions of dollars away from any type of Ontario style risk management policy. (RMP) This stems from the fact that Ontario doesn’t have the political will to make that commitment.  They take their food for granted.  Sometimes, based on some of the statements I’ve heard from the OMAFRA bureaucracy I think they feel Ontario should import all our food.

However, one bad apple shouldn’t spoil the sterling reputation of the Ontario public service working for OMAFRA.  Those public servants will put in place with zeal and gusto any policy their political masters tell them.  Right now in Ontario that’s the status quo.  With the next Ontario election slated for October 4th, 2007, expect that dam to break.  The Ontario Liberals surely will not be as foolish as their rural federal cousins and throw rural Ontario away.

This is all taking place with the eastern Corn Belt under water.  In my neighbourhood, I’ve been shut down for over a week.  Getting to the field in a wet May always seems like an eternity.  Its one reason the grain market is in the top third of their historical range.

You can see it in corn futures.  December futures are at $2.85, Dec 2007 at $3.10 and Dec 2008 at $3.24.  You might scoff at those prices but historically they are much higher than a more traditional futures value of $2.20 bushel.  With corn’s penchant for higher yield jumps versus soybeans many farmers will be looking to corn as the best crop in a very tough situation.

If that doesn’t work, we’ll have to fall back on the new re-jigged and possibly capped out CAIS program.  Those aren’t the best choices.  Maybe that’s why tractors may once again head to Parliament Hill for Canada Day.  Maybe that’s why actions at food distribution centers, bridges, 400 series weigh scales, and fuel distribution centers, may be in our future.

The quest for a Canadian agricultural policy that works goes on.  CAIS was supposed to be history.  For many farmers there will be no rest until that happens.