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Evaluation of AgriStability, AgriInvest, AgriInsurance and the Wildlife Compensation Program - Summary Report

Purpose

Evaluation scope and methodology

Evaluation findings

Relevance

Effectiveness

Efficiency and Economy

Recommendations and management response and action plan

All Management Responses and Actions have a deadline of March 31, 2018 and are under the responsibility of the Director General, Business Risk Management Programs Directorate, Programs Branch.

AgriInsurance
Recommendation Management Response and Action Plan
1. AAFC should work with the provinces to examine options to modify products identified as covering normal business risk in order to transfer greater responsibility to producers and better align the coverage levels provided by AgriInsurance with current GF2 objectives and BRM principles. 1. Agreed. The findings and recommendations will be brought to the attention of provincial and territorial colleagues at the BRM Working Group and Policy Assistant Deputy Minister (ADM) level, and will support a discussion of coverage levels under AgriInsurance. Any proposed changes would be considered under FPT negotiations for the next policy framework. However, as under previous policy frameworks, there is considerable support at the industry and government levels for insurance type approaches to risk management and AgriInsurance in particular. Insurance is seen as respecting the principle of producers to proactively managing risk while providing timely and predictable coverage. Given this, there may be resistance to proposals to change a program that is considered to be working.
2. While some efforts to control costs have been undertaken, AAFC should work with the provinces to identify additional cost-control mechanisms to prevent significant increases in AgriInsurance administrative costs as well as in government premiums should commodity prices and the total value of agricultural production insured continue to increase. 2. Agreed. AAFC will continue the current cost-control measures and will share the recommendation on the need for further controls with the FPT Business Risk Management Working Group and provincial and territorial (PTs) Policy ADMs. Any changes would be negotiated in the context of the next policy framework and would be included in the next framework agreement.
3. AAFC should work with the provinces to refine the performance measures used to assess the efficiency and economy of the administrative costs to deliver AgriInsurance. 3. Agreed. AAFC will negotiate with provinces and territories for a commitment to refine performance indicators under the Next Policy Framework. This will include measures to assess the efficiency and administrative costs of the programs.
Wildlife Compensation Program
Recommendation Management Response and Action Plan
4. AAFC should work with the provinces to reduce administrative costs by adopting a minimum claim amount (for example, $1,000) or charging an application processing fee. Additional opportunities to save on administrative costs should be investigated including reducing federal requirements for on-farm inspection and verification of loss, eliminating payments for recurrent losses, and promoting initiatives to enhance producer preventative efforts to reduce or eliminate the need for compensation. 4. Agreed. AAFC will continue to seek administrative efficiencies in BRM programs. AAFC will present the recommendation to PTs and pursue changes to reduce administrative costs associated with Wildlife Compensation through FPT negotiations.
5. AAFC should work with the provinces to should work with the provinces to continue to investigate the feasibility of including wildlife damages as an insurable peril under AgriInsurance and restricting eligible wildlife to those species protected under federal legislation in order to better align with government mandates and responsibilities. 5. Agreed. The recommendation will be brought to the attention of the PT colleagues through the Working Group and FPT ADMs and the role of FPT governments in wildlife compensation will be considered during the FPT negotiations. Any proposed changes would be considered for the next policy framework.
AgriStability
Recommendation Management Response and Action Plan
6. AAFC should work with the provinces to examine options to reduce AgriStability complexity and, in turn, decrease administrative costs. This will require a re-design of the program to reflect the transition from an income support program to providing producers assistance under severe situations. This could potentially decrease the frequency and amount of information that must be collected from producers as well as reduce program administrative costs.

6. Agreed. In July 2016, FPT Ministers of Agriculture outlined in the Calgary Statement that governments should seek ways to improve participation, timeliness, simplicity and predictability to ensure producers have access to support when needed.

AAFC, in collaboration with PTs, will consider changes to AgriStability to reduce the administrative burden and associated costs. Any proposed changes would require PT agreement and would be negotiated in the context of the next policy framework.

7. AAFC and the provinces should monitor the participation rate of producers in AgriStability to ensure that the program provides coverage to a sufficient number of producers to avert the need for ad hoc programming and payments. Analysis should be undertaken to determine what participation rate would assure a meaningful coverage for the industry, and strategies to facilitate a sufficient number of producers participating in the program should be developed.

7. Agreed. In July 2016, FPT Ministers of Agriculture outlined in the Calgary Statement that governments should seek ways to improve participation, timeliness, simplicity and predictability to ensure producers have access to support when needed.

However, as described above, the capacity of AgriStability to target the individual farm situation comes at the expense of program simplicity. Developing a much simpler program would require a fundamental redesign that would move away from the highly targeted nature of AgriStability. In consultation with industry, they have stressed the importance of the targeting ability of AgriStability and there may not be support for this level of change.

AAFC, in collaboration with PTs, will consider changes to AgriStability to reduce the administrative burden and associated costs. Any proposed changes would require agreement with provinces and territories and would be negotiated in the context of the next policy framework.

AgriInvest
Recommendation Management Response and Action Plan
8. AAFC should work with the provinces to clarify AgriInvest objectives and linkages within the context of the BRM suite of programs. The assessment should inform AAFC and the provinces regarding program design options to support flexibility in risk management while strengthening the program's linkages to GF2 priorities and BRM principles. For example, a potential role of AgriInvest could be to offset a decline in coverage by AgriStability. An option to be explored is to clarify and exercise the cross compliance clause in the GF2 FPT Multilateral Framework Agreement in conjunction with the provinces to implement conditions for producer participation in AgriInvest.

8. Somewhat agree. AgriInvest assists producers in managing income declines and allows for investments that help manage risks. Producers are able to withdraw funds from AgriInvest accounts whenever, and for whatever purpose, they choose. This program approach provides flexibility for producers in managing risk, and in providing timely access to funding during periods of need (for example, income declines).

Given that flexibility is a key feature of AgriInvest, information is not collected to confirm the extent to which these funds are used for risk-mitigating investments. To that end, cross compliance has been viewed as potentially impacting program flexibility and administrative simplicity. While indicators do demonstrate that less than 50 percent of producers use their AgriInvest funds when they experience income declines, producers faced with disruptive events (such as, grain transportation, drought, disease outbreaks, etc.) have been encouraged to use their AgriInvest accounts to help manage the immediate impacts. This, along with support from other business risk management programs, contributed to reducing the need for ad-hoc programming.

The need to clarify the program intent and the potential expansion of cross compliance will be raised with the BRM working group during discussion on the Next Policy Framework.

9. AAFC should work with the provinces to increase the minimum contribution that will justify the administrative expenses to process the AgriInvest contribution and/or producers share in the program administration costs. 9. Agreed. The concept of a higher minimum deposit will be discussed with the Business Risk Management Working Group and FPT Policy ADMs in the context of the negotiations for the next policy framework.
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