AgriStability: Negative Margins
A negative margin occurs when allowable expenses are greater than allowable income for a program year. Negative margins are protected under AgriStability. If your program year margin is negative, you may be compensated for up to 70% of the portion of your margin decline that is below zero.
Producers with a negative reference margin are eligible for AgriStability if they have positive margins in two of the three years used to calculate their reference margin. There is no limit on the number of negative margin payments a producer can receive.
You do not have to apply for negative margin protection. Negative margins are a separate calculation and are automatically calculated when you apply for AgriStability.
In order to be eligible for a negative margin payment, you must meet certain criteria:
- 2 of 3 production margins used to calculate your reference period must be positive.
- you must have followed sound management practices; and
- the negative margin must have occurred because of reasons beyond your control.
Calculation of Payments on Negative Margins
You may be compensated for up to 70% of your negative margin. If you qualify for an AgriStability payment and have a negative margin, you will receive a payment for the positive portion of your margin decline first. Your negative margin payment will be issued separately. Your payment may be adjusted if you did not participate in Production Insurance, or because of payment limits or caps on government contributions.
Example: If you have a reference margin of $120,000 but your margin decline in the program year drops by $140,000, the portion of your margin below zero, or negative margin, will be −$20,000. Your AgriStability payment would include a payment for the positive portion of your margin decline, and another for the negative portion of your margin decline (up to 70%).
|Reference Margin||Margin Decline||Program Year Negative Margin||Payment on the Negative Portion|
|* This payment may be adjusted to account for Production Insurance participation or payment caps.|
|$120,000||$140,000||−$20,000||$20,000 × 70% = $14,000 *|
The maximum payment under AgriStability is capped at either $3 million or 70% of your margin decline, whichever is lower. Any amount over this limit will be deducted from your negative margin payment.
Although participation in AgriInsurance (also known as Production Insurance or Crop Insurance) is not mandatory in order to receive an AgriStability payment, there is an incentive to participate.
If AgriInsurance was available and you did not insure your insurable commodities at the 70% Footnote 1 level, your negative margin benefit may be reduced. The program administration will forward information to the agency delivering AgriInsurance in your province, who will calculate the amount you would have received by participating in Production Insurance, minus the Production Insurance premium that you would have paid. This is called a Deemed Production Insurance Benefit. Your negative margin benefit will be reduced by 70% of this amount.
For more information on negative margins or about AgriStability, please contact the toll-free line at 1-866-367-8506.
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