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Agriculture and Agri-Food Canada
Quarterly Financial Report for the quarter ended June 30, 2017

Agriculture and Agri-Food Canada - Quarterly Financial Report for the quarter ended June 30, 2017 (PDF Version, 535 KB)

Statement outlining results, risks and significant changes in operations, personnel and programs

Introduction

Agriculture and Agri-Food Canada (AAFC)'s Quarterly Financial Report should be read in conjunction with the Main Estimates, Supplementary Estimates (A) as well as Budget 2017 Building a Strong Middle Class. This report has been prepared as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. As such, it has not been subject to an external audit or review.

Detailed information on Agriculture and Agri-Food Canada’s program activities can be found in the Departmental Plan.

Basis of Presentation

This quarterly report has been prepared using an expenditure basis of accounting. The accompanying Statement of Authorities includes the Department's spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates and Supplementary Estimates (A) for the 2017-2018 fiscal year. This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before monies can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of fiscal quarter and fiscal year-to-date results

Authorities

Agriculture and Agri-Food Canada’s Quarterly Financial Report reflects the results of the 2017-2018 fiscal period ending June 30, 2017, for which full supply of Main Estimates and Supplementary Estimates (A) was released on June 23, 2017.

At the end of the first quarter of 2017-2018, Agriculture and Agri-Food Canada had total funding available for use of $2,306.4 million as detailed in Table 1. This amount includes the 2017-2018 Main Estimates of $2,251.2 million, the 2017-2018 Supplementary Estimates (A) of $47.5 million, and $7.7 million related to proceeds collected from the sale of Crown assets. The net increase of $24.3 million compared to Agriculture and Agri-Food Canada’s total authorities at the same time in fiscal year 2016-2017 is mostly due to increases in Vote 10 Grants and Contributions which is partially offset by a decrease in Vote 5 Capital authorities.

Vote 1 Net Operating authorities as of June 30, 2017 totalled $541.8 million, an increase of $4.8 million from the June 30, 2016 amount of $537.0 million. This increase is mainly due to the new funding of $5.0 million in the Dairy Processing Investment Fund and $2.6 million for supporting genomics, digitization and data mobilization of AAFC biological collections. This increase is offset by the decrease of $3.9 million related to the Budget 2016 reduction in non-pay operating expenses.

Vote 5 Capital authorities at the end of the first quarter of 2017-2018 totalled $75.0 million, a decrease of $7.0 million from the June 30, 2016 amount of $82.0 million. This decrease is due to a reduction of $9.2 million with the ending of the Budget 2014 Federal Infrastructure Initiatives offset by funding increase of $1.5 million for supporting genomics, digitization and data mobilization of AAFC biological collections from Budget 2016.

Vote 10 Grants and Contributions authority of $375.9 million as of June 30, 2017 reflects an increase of $32.6 million from $343.3 million at the same time in 2016-2017. This is primarily attributed to funding of $37.6 million to implement the Dairy Farm Investment Program and the Dairy Processing Investment Fund, offset by a decrease of $4.5 million transfer to Western Economic Diversification in support of the Saskatchewan Canadian Cattlemen’s Association project under the Western Diversification Program.

Budgetary Statutory authorities available as at June 30, 2017 were $1,313.7 million, a decrease of $6.1 million from the June 30, 2016 amount of $1,319.8 million. This slight decrease is mainly attributed to an Employee Benefit Plan rate adjustment of $5.0 million.

Graph 1: Comparison of Authorities Available for Use
Description of this image follows in Table 1
Table 1: Authorities Available for Use (In thousands of dollars) [1]
Authorities 2017-2018 2016-2017 Variances Percent
Vote 1 - Net Operating expenditures 541,800 536,955 4,845 1%
Vote 5 - Capital expenditures 74,990 81,993 (7,003) (9%)
Vote 10 - Grants and contributions 375,882 343,252 32,630 10%
Budgetary statutory authorities 1,313,690 1,319,830 (6,140) (0%)
Total Authorities 2,306,362 2,282,030 24,332 1%

Note:

[1] Totals may not add due to rounding.

Expenditures

As detailed in Table 2, at the end of the first quarter of 2017-2018, the Department had spent $191.5 million, compared to $181.2 million for the same period in fiscal year 2016-2017. The increase of $10.3 million is the net result of increases in Vote 1 Net Operating expenditures and Vote 5 Capital expenditures.

Vote 1 Net Operating expenditures at the end of the first quarter were $124.1 million, 23% of the total available for use of $541.8 million, which is greater than expenditures of $115.9 million or 22% of the total available for the same period last fiscal year. The increase of $8.2 million in actual expenditures from 2016-2017 is primarily due to increased salary expenditures of $6.9 million with an increase in personnel costs for retroactive collective bargaining amounts being paid out.

Vote 5 Capital expenditures at the end of the first quarter were $5.2 million or 7% of the total available for use of $75.0 million. For the same period in 2016-2017, expenditures were $3.7 million or 5% of the budget of $82.0 million. The increase of $1.4 million in capital expenditures is mainly due to the timing of spending related to various projects.

Vote 10 Grants and Contributions expenditures at the end of the first quarter of 2017-2018 were $14.7 million or 4% of the total available for use of $375.9 million. This is not materially different from the same period in 2016-2017 ($15.0  million or 4% of the total available for use of $343.3 million). Historically, the majority of spending on grants and contributions has been in the last half of the fiscal year.

Budgetary Statutory Authorities expenditures at the end of the first quarter of 2017-2018 were $47.5 million compared to $46.6 million for the same period of the previous year.

Graph 2: Comparison of Expenditures
Description of this image follows in Table 2
Table 2: Expenditures (In thousands of dollars) [1]
Expenditures 2017-2018 2016-2017 Variance Percent
Vote 1 - Net Operating expenditures 124,066 115,850 8,216 7%
Vote 5 - Capital expenditures 5,175 3,732 1,443 39%
Vote 10 - Grants and contributions 14,728 15,002 (274) (2%)
Budgetary statutory authorities 47,533 46,598 935 2%
Total Net Budgetary Expenditures 191,503 181,181 10,321 6%
Note:
[1] Totals may not add due to rounding.

Expenditures in Comparison to Authorities

At the end of the first quarter of 2017-2018, the Department had spent $191.5 million (8% of the total funding available for use), compared to $181.2 million for the same period in fiscal year 2016-2017 (8% of the total funding available for use).

Graph 3: Comparison of Total Authorities and Total Net Budgetary Expenditures as of June 30, for fiscal years 2017-2018 and 2016-2017
Description of this image follows

Table 3 presents budgetary expenditures by standard object. The increase of $10.3 million is a function of increased spending in Personnel and Acquisition of land, buildings and works, and decreased revenue collection, partially offset by decreased spending in Professional and special services. The increase of $6.4 million, or 6% in Personnel is primarily attributed to a $3.8 million increase in retroactive payments and a $1.2 million increase in student salaries. The decrease of $5.7 million in Professional and Special Services is mainly due to a $2.2 million decrease in expenditures for information technology and telecommunication consultants with the remaining variance caused by decreased spending in other various items.

Agriculture and Agri-Food Canada has total Revenue Spending authority of up to $57.1 million for 2017-2018. The revenue is generated from collaborative research agreements between Agriculture and Agri-Food Canada and third parties, the grazing and breeding activities of the Community Pastures Program, the administration of the AgriStability Program, as well as recoveries for costs related to Internal Support Services provided to other departments. The Department has generated $11.0 million in revenues up to the end of the first quarter of 2017-2018 compared to $16.7 million for the same period last year. The $5.7 million decrease is mainly due to a $4.0 million decrease in revenue collected for the Community Pastures Program as it is being wound down and a $1.1 million decrease for Information Technology services provided to other government departments due to the timing of the collections.

Table 3: Budgetary Expenditures by Standard Object (In thousands of dollars) [1]
Expenditures 2017-2018 2016-2017 Variances Percent
Personnel 119,751 113,374 6,377 6%
Transportation and communications 2,508 2,678 (170) (6%)
Information 1,232 1,173 59 5%
Professional and special services 13,249 18,915 (5,666) (30%)
Rentals 2,715 675 2,040 302%
Repairs and maintenance 1,658 3,097 (1,439) (46%)
Utilities, materials and supplies 5,461 6,023 (562) (9%)
Acquisition of land, buildings and works 3,790 1,460 2,330 160%
Acquisition of machinery and equipment 2,309 3,523 (1,214) (34%)
Transfer payments 47,277 45,205 2,072 5%
Other subsidies and payments 2,556 1,753 803 46%
Total Gross Budgetary Expenditures 202,506 197,876 4,630 2%
Less: Revenues netted against expenditures 11,003 16,695 (5,692) (34%)
Total Net Budgetary Expenditures 191,503 181,181 10,322 6%

Note:

[1] Totals may not add due to rounding.

Risks and Uncertainties

Agriculture and Agri-Food Canada continues to exercise prudent management in delivering its policies and programs. The Department systematically identifies, assesses, monitors, and responds to a variety of corporate, operational, program and project-level internal and external risks and opportunities. These activities are captured within a few tools that are in place, including the Department’s Program Performance Measurement and Risk Management Strategies which identifies and monitors ongoing performance measurement, including risk and opportunity monitoring and performance information availability, to effectively support program expenditures. The Department's decision-making capacity is enhanced by effectively embedding risk and opportunity management within its culture, processes, and planning practices. Annually, Agriculture and Agri-Food Canada updates its Corporate Risk Profile to communicate the key risks and opportunities that have the potential to influence departmental priorities, resource allocation, and the achievement of Strategic Outcomes.

Significant changes in relation to operations, personnel and programs

Personnel

On April 18, 2017, Kimberly Saunders was appointed as the Director General, Office of Audit and Evaluation.

On May 23, 2017, Lisa Foss was appointed to the position of Corporate Secretary, Deputy Minister’s office.

On May 29, 2017, Chris Forbes was appointed as the Deputy Minister of Agriculture and Agri-Food.

Programs

Budget 2017 proposes to provide an additional $395.5 million across government, over three years, starting in 2017-2018, for the Youth Employment Strategy. The resources identified in the budget will permit the Department to seek funding of $2.6 million in 2017-2018 for the Agricultural Youth Green Jobs Initiative under Employment and Social Development Canada’s Renewed Youth Employment Strategy.

There are two new AAFC programs that are designed to help the dairy sector begin to adapt to new competition resulting from the Comprehensive Economic and Trade Agreement (CETA). The Dairy Farm Investment Program (DFIP) ($250 million over five years) will help dairy farmers modernize their operations and improve their productivity. The Dairy Processing Investment Fund (DPIF) ($100 million over four years) will support dairy processors as they modernize their facilities and conduct near market activities to introduce new and improved products that will compete with expected imports.

Approval by Senior Officials
Approved by:

Original signed by
Chris Forbes, Deputy Head
Ottawa, Canada

Original signed by
Pierre Corriveau, Chief Financial Officer

Statement of Authorities (unaudited)
For the quarter ended June 30, 2017
(In thousands of dollars)
Fiscal year 2017-2018 [1] Fiscal year 2016-2017 [1]
Total available for use for the year ending March 31, 2018 [2] Used during the quarter ended June 30, 2017 Year to date used at quarter-end Total available for use for the year ending March 31, 2017 [2] Used during the quarter ended June 30, 2016 Year to date used at quarter-end
Vote 1 - Net Operating expenditures $541,800 $124,066 $124,066 $536,955 $115,850 115,850
Vote 5 - Capital expenditures 74,990 5,175 5,175 81,993 3,731 3,731
Vote 10 - Grants and contributions 375,882 14,729 14,729 343,252 15,002 15,002
Budgetary statutory authorities [3] 1,313,690 47,533 47,533 1,319,830 46,598 46,598
Total Budgetary authorities 2,306,362 191,503 191,503 2,282,030 181,181 181,181
Total authorities $2,306,362 $191,503 $191,503 $2,282,030 $181,181 $181,181

Notes:

[1] Totals may not add due to rounding.

[2] Includes only Authorities available for use and granted by Parliament at quarter-end.

[3] Details on Budgetary statutory authorities are included the table below.

Departmental budgetary expenditures by Standard Object (unaudited)
For the quarter ended June 30, 2017
(In thousands of dollars)
Fiscal year 2017-2018 [1] Fiscal year 2016-2017 [1]
Planned expenditures for the year ending March 31, 2018 Expended during the quarter ended June 30, 2017 Year to date used  at quarter-end Planned expenditures for the year ending March 31, 2017 Expended during the quarter ended June 30, 3016 Year to date used at quarter-end
Expenditures:
Personnel $470,488 $119,751 $119,751 $469,887 $113,374 $113,374
Transportation and communications 11,649 2,508 2,508 11,078 2,678 2,678
Information 6,156 1,232 1,232 5,136 1,173 1,173
Professional and special services 104,330 13,249 13,249 120,164 18,915 18,915
Rentals 2,685 2,715 2,715 3,760 675 675
Repair and maintenance 17,193 1,658 1,658 18,545 3,097 3,097
Utilities, materials and supplies 44,288 5,461 5,461 51,410 6,023 6,023
Acquisition of land, buildings and works 31,928 3,790 3,790 10,084 1,460 1,460
Acquisition of machinery and equipment 47,851 2,309 2,309 41,160 3,523 3,523
Transfer payments 1,618,306 47,277 47,277 1,585,676 45,205 45,205
Other subsidies and payments 8,621 2,556 2,556 25,075 1,753 1,753
Total gross budgetary expenditures 2,363,495 202,506 202,506 2,341,976 197,876 197,876
Less Revenues netted against expenditures:
Vote-netted revenues 57,133 11,003 11,003 59,946 16,695 16,695
Total Revenues netted against expenditures 57,133 11,003 11,003 59,946 16,695 16,695
Total net budgetary expenditures $2,306,362 $191,503 $191,503 $2,282,030 $181,181 $181,181

Note:

[1] Totals may not add due to rounding.

Appendix A

Budgetary Statutory Authorities Breakdown (unaudited)
For the quarter ended June 30, 2017
(in thousands of dollars)
Fiscal year 2017-2018 [1] Fiscal year 2016-2017 [1]
Planned expenditures for the year ending March 31, 2018 Expended during the quarter ended June 30, 2017 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2017 Expended during the quarter ended June 30, 2016 Year to date used at quarter-end
Contributions to employee benefit plans $63,449 $15,695 $15,695 $68,411 $17,099 $17,099
Contributions to employee benefit plans (Administrative Tribunals Support Service of Canada) - - - - - -
Minister of Agriculture and Agri-Food - Salary and motor car allowance 84 21 21 84 21 21
Contribution payments for the AgriStability program 219,300 1,068 1,068 219,300 (2,644) (2,644)
Contribution payments for the AgriInsurance program 640,800 6,005 6,005 640,800 12,109 12,109
Grant payments for the AgriInvest program 126,200 31,017 31,017 126,200 34,143 34,143
Payments in connection with the Agricultural Marketing Programs Act 65,900 (2,677) (2,677) 65,900 1,236 1,236
Grant payments for the AgriStability program 41,000 (597) (597) 41,000 (2,449) (2,449)
Contribution payments for the AgriInvest program 17,500 402 402 17,500 412 412
Loan guarantees under the Canadian Agricultural Loans Act 13,111 (3) (3) 13,111 (3) (3)
Canadian Cattlemen's Association Legacy Fund - - - - - -
Contributions in support of the Assistance to the Pork Industry Initiative - - - - (12,435) (12,435)
Grants to agencies established under the Farm Products Agencies Act 100 (2,502) (2,502) 100 - -
Contribution payments for the Agricultural Disaster Relief Program (ADRP)/AgriRecovery 118,513 - 118,513 -
Canadian Pari-Mutuel Agency Revolving Fund - (1,147) (1,147) - (1,248) (1,248)
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets 7,732 416 416 8,911 522 522
Contributions for agricultural risk management - Enhanced Spring Credit Advance program Business Risk Management - (145) (145) - (54) (54)
Class grant payments for the Transitional Industry Support program - - - - (3) (3)
Class grant payments for the Farm Income program - - - - - -
Grant payments for the Canadian Agricultural Income Stabilization program Inventory Transition Initiative - (6) (6) - (4) (4)
Contribution payments for the Canadian Agricultural Income Stabilization program Inventory Transition Initiative - (13) (13) - (99) (99)
Grants in support of the Grain and Oilseed Payment program - (1) (1) - (5) (5)
Grants in support of the Cost of Production Benefit - - - - - -
Contribution for the Transitional Industry Support Program - - - - -
Budgetary statutory authorities $1,313,690 $47,533 $47,533 $1,319,830 $46,598 $46,598

Note:

[1] Totals may not add due to rounding.

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