Changes to AgriStability and AgriInvest Programs

Several of Canada's Agricultural Ministers recently met to determine the direction of the “Growing Forward” suite of farm programs, which includes AgriStability (formerly “CAIS”). Major changes were proposed and will be effective for the 2013 program (fiscal) year.

AgriStability

2011 and 2012 AgriStability applications will be processed under current program guidelines:

• Coverage begins following a 15% drop in margin
• Benefits are tiered based on the extent of loss in margin:
  • Tier 1 (first 15% drop): Government share 50% is not paid out;
  • Tier 2 (next 15% drop): Government covers 70%;
  • Tier 3 (remaining drop in margins): Government covers 80%.
• Since 2011, the SDRM benefit received may actually reduce AgriStability benefit (see “SDRM”)
• Significant changes scheduled for 2013 will lead to the reduction of AgriStability for the following reasons:
  • To trigger the AgriStability benefit, the required 15% drop in margin will increase to a 30% drop.
  • Tier 1 and 2 will not be paid out. Tier 3 will be paid out however coverage will reduce from 80% to 70%.
  • AgriStability fees for program participation will be reduced accordingly.
  • The reference margin will be restricted to the lower of actual or “prior year’s allowable expenses.” Agricorp has not yet provided details of this calculation.

Interim Applications for AgriStability

Farmers should be aware that the AgriStability program offers an interim application process. An interim application can be submitted to Agricorp if a producer is faced with an exceptionally difficult year with unusually low prices or unusually high expenses. The application would be prepared using income and expense projections to the end of the producer’s current fiscal year. Once the interim application is processed, the producer receives 50% of the calculated benefit up front. However the producer is required to file the final application with actual numbers at the end of the fiscal year to settle the benefit amount being paid out. The interim application can be submitted 6 months into, and prior to the end of, the current fiscal year.

AgriInvest

Delivered by Agriculture and Agri-Food Canada, AgriInvest is a cost-shared program that is 60% federally funded and 40% provincially funded. It requires a savings bank account for matched government contributions. There are no required triggers to withdraw funds and producers receive interest on the balance of their deposits at rates determined by their financial institution.

Up to and including the 2012 program (fiscal) year, producers are able to contribute a matchable deposit based on 1.5 % of their allowable net sales (ANS), meaning gross commodity sales less qualifying purchases, such as seed and plant expenses. The ANS is currently limited to $1,500,000 at 1.5% for a maximum AgriInvest benefit of $22,500. Effective 2013, this rate will be reduced to 1%, which has the effect of reducing maximum benefit to $15,000.

2011 AgriInvest Deposit Notices have begun to be issued. Farmers should monitor their mailboxes as there is no hard deadline for this program. Each producer will have 90 days from the issue date on their AgriInvest Deposit form to make their bank deposit. Once the producer’s deposit is matched by government funds, the farmer can choose to withdraw funds by setting up a transfer to their farm bank account. The government portion is taxable. While the farmer can choose to defer taxes by not withdrawing the funds, once the withdrawal is made all taxable government funds are considered to be withdrawn first, ahead of the non-taxable producer deposits.

SDRM Edible Horticulture

The 2012 SDRM Edible Horticulture forms, which are based on previous year 2011 AgriStability Statements, have begun to flow. Producers with sales over $2,500,000 will find the 3-tiered SDRM rates are more favourable for 2012, resulting in higher SDRM benefits. However, since 2011, the SDRM benefit is considered to be an advance payment of the 40% provincial portion of the AgriStability benefit.