News release

GOVERNMENT OF CANADA ANNOUNCES $1 BILLION FOR CANADIAN FARMERS TO EASE CASH-FLOW PRESSURES, SET STAGE FOR TRANSFORMING INDUSTRY

GUELPH, March 29, 2005 - Agriculture and Agri-Food Minister Andy Mitchell today announced $1 billion in immediate federal assistance for cash-strapped Canadian farmers facing record low farm incomes as the first step in an aggressive all-out effort to restructure the national agriculture and agri-food industry and bring profitability back to one of Canada's most important sectors. Minister Mitchell was joined today in Guelph by Brenda Chamberlain, Member of Parliament for Guelph and other Members of Parliament.

The Farm Income Payment Program will begin delivering the money in April as part of a two-part plan to ease immediate financial pressures on farmers and allow for a transformation of the industry that addresses the root causes of declining farm income.

Minister Mitchell noted that agriculture is a shared federal/provincial jurisdiction and called on the provinces to match today's announced initiative on a 60/40 basis. In the meantime, he said the Government of Canada is making this money available immediately to address the severe financial hurt in the sector.

"At a time when the marketplace is demanding bold innovation, farmers across Canada have been devastated by some of the most difficult years ever faced by the industry," said Minister Mitchell. "We need to immediately provide some stability to producers, across all sectors, and to move forward in a transforming way, which will take us beyond this frustrating cycle of crisis."

Transformation is already underway in Canada's cattle and ruminant industry. The Government of Canada announced the Repositioning Livestock Industry Strategy last September to develop a stronger industry that was less dependent on a single market and would also keep more value-added profit at home. That strategy is already leading to more processing capacity in Canada and is even more important now with the continued closure of the American border to Canadian live cattle and other ruminants.

The $1 billion Farm Income Payment Program will supplement current federal, provincial and territorial agriculture programs that last year paid out a record $4.9 billion to farmers. The program will provide assistance to all sectors but will be of greatest benefit to two of the most affected, cattle and other ruminants and grains and oilseeds.

The Farm Income Payment Program includes a general payment of $841.5 million for all eligible Canadian producers. About 55 per cent of that payment is expected to go to grains and oilseeds producers. Cattle and ruminant producers will receive about 18 per cent of that payment.

In addition to their share of that payment, cattle and ruminant producers will also receive $155 million in direct payments based on their inventory as of December 23, 2003 to deal with the income pressures created by the ongoing closure of a number of borders to Canadian live cattle and other ruminants.

The Farm Income Payment Program will be based on the same eligibility criteria used for last year's Transitional Industry Support Program (TISP), which provided $930 million in federal funds to help farmers deal with income pressures. Farmers who participated in TISP will automatically receive a payment under the Farm Income Payment Program. They will not need to apply.

Producers who were eligible for TISP but didn't apply can receive a payment under the Farm Income Payment Program. A guide and an application form for the Farm Income Payment Program will be available in the near future.

"This announcement comes at a crucial time for Canadian producers, particularly in the grains and oilseeds, ruminant, and horticulture sectors," said Bob Friesen, President of the Canadian Federation of Agriculture. "It is an important first step in helping to move producers past current challenges."

"Maintaining cash flow is critical for livestock and ruminant sectors as we wait for the re-opening of the American border and as we work with governments to reposition our sectors to recover from the current crisis and build a strong and more resilient industry for the future," said Canadian Cattlemen's Association President Stan Eby.

Today's announcement follows on a series of program initiatives and investments in the industry since 2003, including:

$2.6 billion in federal, provincial and territorial funding to assist the cattle and ruminant industry in the wake of the discovery of BSE in Canada, including a federal investment of $488 million for Canada's Repositioning the Livestock Industry Strategy;

a $50 million federal contribution to the Canadian Cattlemen's Association's Legacy Fund to launch an aggressive marketing campaign to reclaim and expand markets for Canadian beef;

modifications to Canada's key agricultural business risk management program, the Canadian Agricultural Income Stabilization (CAIS) Program, allowing it pay out more than $1.2 billion in its first 15 months to producers hurt by drought, the impact of BSE, the Avian flu epidemic and the decline in many commodity prices;

an estimated $892 million in payments for the 2004 crop year under Production Insurance to help farmers deal with weather-related losses;

$930 million under the Transitional Industry Support Program to help farmers with income pressures and move to new business risk management programs;

$104 million in new federal funding to expand cash advance programs to include livestock, allowing farmers to hold on to their products to avoid lower prices created by market oversupply. In 2004, spring and fall cash advances made $1.2 billion available to Canadian farmers, with interest costs of over $12 million paid by the federal government.

Recently, Minister Mitchell announced a further adjustment to allow producers who had deposited more than the required minimum deposit in CAIS to withdraw the excess funds in their accounts. The change will make significant funds available immediately, including more than $117 million available to the approximately 14,000 producers in the provinces where the Government of Canada administers the program.

For more information on the Farm Income Payment Program, visit Agriculture and Agri-Food Canada's Web site at www.agr.gc.ca or call 1-866-367-8506.

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For more information, please contact:

Media Relations
Agriculture and Agri-Food Canada Ottawa
1-866-345-7972
(613) 759-7972
media@agr.gc.ca

Elizabeth Whiting
Press Secretary
Minister Mitchell's Office
(613) 759-1059

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