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Canadian Agriculture Partnership (CAP)
Every five years the Canadian government together with the provinces formulate a suite of farm programs that will service agriculture for the next term. Growing Forward 2 fulfilled its five year term December 31, 2017 and has been phased out to be replaced with the Canadian Agriculture Partnership.
Many programs are delivered under the umbrella of CAP including AgriStability and AgriInvest. Although the basics of these programs are very similar to the Growing Forward 2 version there are some changes that we will summarize here:
Reference Margin Limit (RML): Under the previous version of AgriStability, the reference margin was determined using the lower of two calculations. One calculation takes allowable revenue such as commodity sales and income from insurance on commodities less direct costs including purchase of commodities, chemical, fertilizer, power and commodity insurance premiums. The second calculation (RML) is essentially the total allowable expenses for the year. With the RML calculation low cost producers were being disadvantaged because their allowable expenses were low, thus resulting in their margin being correspondingly low.
The changes made to the second calculation (RML) for 2018 and beyond attempts to address this inequity. There is now a guarantee that the RML can be no less than 70% of the first calculation.
Payments are triggered under AgriStability when the current year margin is 70% or less than the average of 3 of the 5 previous year’s reference margins. Applying the new RML method, very low cost producers will be covered for 70% of 70% of their first calculation, or 49% of the first calculation whereas before their payment was capped at their allowable expenses, which could have been a lesser amount.
Another change is that in a disaster situation the province can open up admittance to the program past the normal April 30th deadline (resulting in a 20% reduction of benefits received for that year for the producer).
There is a reduction from $1.5 million to $1 million in the cap on the dollar amount of eligible net sales that qualify for the program. A farmer can contribute 1% of their eligible net sales (commodity sales & insurance less commodity purchases) up to this reduced amount. For a producer with 1.5 million in net sales or more this represents a $5,000 reduction in the government matching contributions to their AgriInvest account.