Farmers Forum staff
OTTAWA — A new study, commissioned by a coalition of farming organizations, evaluated the risk management program (RMP) and self-directed risk management program (SDRM) and found that almost all farmers say the programs are vital for their operations. Their financial lenders are happy with it, too.
The Oct. 31 study, commissioned by the Ontario Agriculture Sustainability Coalition (OASC), found that every dollar spent on Ontario’s Risk Management program and Self-Directed Risk Management Programs leads to a $2.01 to $3.60 return on investment.
The RMP/SDRM is a cost-shared insurance program that provides partial financial protection for farmers against downturns in commodity market prices. The program allows farmers to mitigate input cost volatility, and enables many participating farmers to increase their investments in innovation, equipment and labour.
Fifty-six per cent of farmers said the existence of the RMP had a “positive impact on their mental health” and 60 per cent said that removing RMP would have a negative impact on their ability to improve technology. In a focus group, one farmer noted: “The banks appreciated seeing the RMP/SDRM at the bottom line. It certainly makes the account manager happy to know that there’s a little bit of a backstop in case of uncertainties.”
Said another farmer: “Banks like the fact that there’s somebody standing behind you.”
“RMP is the single most important business risk management program for beef farmers in Ontario,” Beef Farmers Ontario (BFO) president and OASC vice-chair Jack Chaffe told Farmers Forum. “As highlighted in the study, more than 95 per cent of participating farmers agree that not having access to this program would negatively impact their farm operations.”
Chaffe added that “Farmers, like many sectors, now face unprecedented levels of risk and uncertainty. These risks cannot be sufficiently managed by good management alone due to inflationary cost of production increases, trade and supply chain disruptions, increased debt servicing costs due to rising interest rates, and significant market volatility.”
The study also highlighted concerns over the level of funding going into RMP.
“Increased investment in the program is paramount for it to work effectively and adequately respond to the current risks we are facing to produce food in this province,” Chaffe said. “The study, we conducted with OASC, provides strong evidence to support that the program is viewed positively by farmers, and that the program provides significant economic spin-off for the province and positive returns on the taxpayer investment.”
On average from 2016 to 2020, program funding only covered 40.4% of calculated insurance benefits for participating farmers due to the current funding cap. The study found that farmers view the program as a particularly important risk management tool for young and beginning farmers.
OASC is composed of the Beef Farmers of Ontario, Ontario Fruit and Vegetable Growers’ Association, Grain Farmers of Ontario, Ontario Pork, Ontario Sheep Farmers, and the Veal Farmers of Ontario. The coalition was formed in 2009 to develop and implement the Risk Management Program (RMP) in Ontario at the request of the Government of Ontario.