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WHEREAS producers in the Province have experienced numerous disasters which have affected the economic viability of our farms and consequently the Canadian Agricultural Income Stabilization (CAIS) program was put in place to replace all previous safety net programs available to agricultural producers; AND WHEREAS the pricing of opening and closing inventories at their closing values does not take out the full amount of revenue from the prior production year, which limits the claims for grain and oilseeds producers;AND WHEREAS the CAIS program in its current form is not working for Alberta producers;
THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties urge Agriculture and Agri-Food Canada, Alberta Agriculture, Food and Rural Development; and the Agriculture Financial Services Corporation to implement a retroactive change to the CAIS program that would allow producers the option of pricing inventories with separate beginning and ending values so that net changes to inventory values could be shown in the program year margin.
The Canadian Agricultural Income Stabilization (CAIS) program was developed with the intention of replacing previous safety net programs available to agricultural producers such as Farm Income Disaster Program, Canadian Farm Income Program, and the Net Income Stabilization Account. On the Alberta Food and Rural Development website, it is stated that “CAIS is a permanent disaster program that offers margin protection to all agricultural producers beginning in 2003”. This program requires annual selection of a protection level and the appropriate refundable deposit. During years of margin decline, the intent is that the producer gains entitlement to government benefits according to their level of protection and the level of margin decline. The CAIS program supposedly allows producers to protect their farming operations against margin declines. For smaller losses, producers and government equally share the burden of replacing lost income, and as losses increase, so does the government’s share.The major problems with the program are noted as being:- Pricing the opening and closing inventory at the closing value does not take out the full amount of revenue from the prior production year. This has limited the claims for grain and oilseeds producers in 2004 and 2005.- CAIS claims processing and payments are taking 12 to 18 months for many producers, which is too long.- The existing structural change calculations are neither predictable nor bankable for many producers. This leads to uncertainty for many from year to year when planning cash flows.EXAMPLE:A farmer starting 2004 with 10,000 bushels of canola in the bin sells the canola on January 30 for $8.00 a bushel or $80,000. The farmer is hailed out on July 30 of that year and ends the year with no canola in the bin.Under the current CAIS program, the farmer’s inventory change is calculated using the ending price for the year of $6.13 a bushel, or a loss of $61,300.00.Using an opening and closing inventory value for the same farmer would result in an inventory loss of $80,100 (farmer’s beginning inventory $80,100 of canola ? ending inventory of $0). This results in an extra $18,800 of loss being applied against the program year margin.The calculations are based on 2004 CAIS Price List for #1 Canada Canola.January $8.01 buDecember $6.13 bu
The AAMDC currently has no resolutions in effect with respect to this issue.
A 2006 federal announcement offered producers the greater of the P2 inventory method or the P1-P2 method for marketable inventory for the years 2002 to 2005. In response to making the program more predictable and bankable, AFSC upgraded its CAIS processing system. Producers now have the opportunity to e-file and have automated planning tools and status indicators available on AFSC’s upgraded website.As of the 2007 Program Year, CAIS has been replaced by AgriInvest and AgriStability. AgriInvest helps producers protect their margin from declines of less than 15%, and is delivered by the federal government. AgriStability payments are received when a producers program margin falls below 85% of their reference margin, and is delivered provincially in Alberta. The AAMDC will continue to monitor these programs and provide updates as developments occur.