Canadian Agricultural Partnership - Business Risk Management Programs (effective April 2018)
Under the Canadian Agricultural Partnership, producers will continue to have access to a robust suite of Business Risk Management (BRM) programs to help manage significant risks that threaten the viability of their farm and are beyond their capacity to manage.
- Governments continue to support proactive approaches to risk management
- AgriStability provides support when producers experience a large margin decline.
- AgriInvest provides cash flow to help producers manage income declines.
- AgriInsurance provides cost-shared insurance against natural hazards to reduce the financial impact of production or asset losses. The Western Livestock Price Insurance program will continue to play an important role in the BRM suite.
- AgriRecovery is a disaster relief framework to help producers with the cost of activities necessary for recovery following natural disaster events.
- Federal, provincial and territorial (FPT) governments will also continue to support the development of new risk management tools through the AgriRisk program.
Upcoming changes to the Business Risk Management suite of programs under the Canadian Agricultural Partnership
Changes to BRM programs will come into effect for the 2018 program year. The existing program rules remain in effect for the 2016 and 2017 program years.
AgriStability and Reference Margin Limits
Under AgriStability the Reference Margin Limit (RML) will be changed to ensure a more equitable level of support for all producers:
- The change to the RML will ensure producers from all sectors will have improved access to support under the program, regardless of their cost-structure.
- It will guarantee all producers at least 70% of their Reference Margin.
- The RML will continue to target assistance to significant income losses threatening the viability of producers' farms and that are beyond their capacity to manage.
AgriStability and Late participation
- A late participation mechanism has been added that provincial and territorial governments can trigger to allow producers to enter the program late in situations where there is a significant income decline and a gap in participation.
- The mechanism will only be triggered in response to significant events and benefits will be reduced by 20% for producers who enrol late, to encourage regular annual enrollment by producers.
- This measure is intended to allow governments to ensure all producers can access AgriStability support when a significant decrease in revenue threatens the viability of the farm, should provinces and territories choose to trigger it.
AgriInvest and AgriStability
- While AgriInvest continues to be an important part of the BRM suite, changes to the program were necessary to reallocate funding to ensure a more equitable level of support for all producers in the AgriStability program.
- Beginning in the 2018 program year, the maximum Allowable Net Sales (ANS) eligible under AgriInvest will be reduced to $1 million, down from $1.5 million.
- The annual government matching contributions will be limited to $10,000 per AgriInvest account, down from $15,000.
- Currently there is approximately $2.2 billion in AgriInvest account balances, which provides producers with flexibility and quick access to funds to help manage their risks.
- Under AgriInvest the minimum payment will be adjusted from $75 to $250.
- A $250 minimum payment will also apply under AgriStability.
Business Risk Management Program Review
- Governments will undertake a review of Business Risk Management programs to assess program effectiveness and impact on growth and innovation. There will be an early focus on the ability of the programs to respond to market risk, with a specific focus on AgriStability.
- Based on the early findings of the review, options will be brought forward for consideration at the July 2018 Ministers' meeting to improve timeliness, simplicity and predictability, and that are cost-neutral.
- The review will recognize the importance of all programs (AgriStability, AgriInvest, AgriInsurance).
- An external Expert Panel including producers, academia and global experts will be engaged to provide input throughout the review.
- Broader industry engagement will also ensure an understanding of the nature of risk faced by the sector and the effectiveness of the programs.
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