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Quarterly Financial Report for the quarter ended June 30, 2018

Agriculture and Agri-Food Canada - Quarterly Financial Report for the quarter ended June 30, 2018 (PDF Version, 221 KB)

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

Introduction

Agriculture and Agri-Food Canada's Quarterly Financial Report should be read in conjunction with the Main Estimates. 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 for the 2018-2019 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 (YTD) results

Authorities

Agriculture and Agri-Food Canada’s Quarterly Financial Report reflects the results of the 2018-2019 fiscal period ending June 30, 2018, for which full supply of Main Estimates was released on June 22, 2018.

At the end of the first quarter of 2018-2019, Agriculture and Agri-Food Canada had total funding available for use of $2,525.3 million as detailed in Table 1. This amount includes the 2018-2019 Main Estimates of $2,516.0 million and $9.3 million related to proceeds collected from the sale of Crown assets. The net increase of $218.9 million compared to total authorities at the same time in fiscal year 2017-2018 is due to increases in Budgetary Statutory authorities,  Vote 10 Grants and Contributions and Vote 1 Net Operating authorities, partially offset by decreases in Vote 5 Capital authorities.

Vote 1 Net Operating authorities as of June 30, 2018 totalled $568.5 million, an increase of $26.7 million from the June 30, 2017 amount of $541.8 million. This increase is mainly due to  funding of $26.8 million related to new collective bargaining agreements.

Vote 5 Capital authorities at the end of the first quarter of 2018-2019 totalled $54.9 million, a decrease of $20.1 million from the June 30, 2017 amount of $75.0 million. This decrease is primarily due to a reduction of $19.1 million with the winding down of the Budget 2016 Federal Infrastructure Initiatives.

Vote 10 Grants and Contributions authority of $425.5 million as of June 30, 2018 reflects an increase of $49.6 million from $375.9 million at the same time in 2017-2018.  This is primarily attributed to significant increases related to implementation of the Dairy Farm Investment Program and the Dairy Processing Investment Fund, and minor increases in Agricultural Clean Technology programs and support for the Canadian Agricultural Adaptation Program.

Budgetary Statutory authorities available as of June 30, 2018 were $1,476.4 million, an increase of $162.7 million from the June 30, 2017 amount of $1,313.7 million. This is mainly due to a $163.9 million forecast increase in AgriStability spending based on market conditions.

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 2018-2019 2017-2018 Variances Percent
Vote 1 - Net Operating expenditures 568,454 541,800 26,654 5%
Vote 5 - Capital expenditures 54,888 74,990 (20,102) (27%)
Vote 10 - Grants and Contributions 425,525 375,882 49,643 13%
Budgetary statutory authorities 1,476,391 1,313,690 162,701 12%
Total Authorities 2,525,258 2,306,362 218,896 9%

Note:

  1. Totals may not add due to rounding.

Expenditures

As detailed in Table 2, at the end of the first quarter of 2018-2019, the Department had spent $179.0 million, compared to $191.5 million in the same period in fiscal year 2017-2018, a decrease of $12.5 million.

Vote 1 Net Operating expenditures at the end of the first quarter were $123.0 million, 22% of the total available for use of $568.5 million, which is slightly less than expenditures of $124.1 million or 23% of the total available for the same period last fiscal year. The overall decrease of $1.1 million is due to higher salary expenditures of $3.5 million, partially offset by a $2.7 million increase in revenues and a $2.6 million decrease of non-pay operating expenditures for the Canadian Agricultural Partnership.

Vote 5 Capital expenditures at the end of the first quarter were $1.9 million or 3% of the total available for use of $54.9 million. For the same period in 2017-2018, expenditures were $5.2 million or 7% of the budget of $75.0 million. The decrease of $3.3 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 2018-2019 were $8.2 million or 2% of the total available for use of $425.5 million, compared to $14.7 million, or 4% of the total available for use for the same period last fiscal year. The decrease of $6.5 million is mainly attributed to a $12.6 million decrease in program spending due to it being the first year of Canadian Agricultural Partnership implementation. This decrease is partially offset by $6.5 million spending in support of the implementation of the Dairy Farm Investment Program and the Dairy Processing Investment fund.

Budgetary Statutory Authorities expenditures at the end of the first quarter of 2018-2019 were $46.0 million compared to $47.5 million for the same period of the previous year. The $1.5 million decrease is attributed to several offsetting factors: $14.7 million increase in the AgriInsurance Program due to timing of claims received, $8.1 million increased spending in connection with the Agricultural Marketing Programs Act, $3.0 million increase in the AgriInvest program; these increases are partially offset by an increase in recoveries of $22.7 million under the Assistance to the Pork Industry Initiative and $6.4 million decrease in the AgriStability program due to timing of expenditures.

Graph 2: Comparison of Expenditures
Description of this image follows in Table 2
Table 2: Expenditures (in thousands of dollars) [1]
Expenditures 2018-2019 2017-2018 Variance Percent
Vote 1 - Net Operating expenditures 122,958 124,066 (1,108) (1%)
Vote 5 - Capital expenditures 1,874 5,175 (3,301) (64%)
Vote 10 - Grants and Contributions expenditures 8,191 14,728 (6,537) (44%)
Budgetary statutory expenditures 46,006 47,533 (1,527) (3%)
Total Net Budgetary Expenditures 179,029 191,503 (12,474) (7%)

Note:

[1] Totals may not add due to rounding.

Expenditures in Comparison to Authorities

At the end of the first quarter of 2018-2019, the Department had spent $179.0 million (7% of the total funding available for use), compared to $191.5 million for the same period in fiscal year 2017-2018 (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 2018-2019 and 2017-2018
Description of this image follows in Table 3

Table 3 presents budgetary expenditures by standard object. Total net budgetary expenditures by standard object have decreased by $12.5 million in the first quarter of 2018-2019 compared to the same period last year. The decrease of $10 million or 21% in Transfer payments is mainly caused by a $12.6 million decrease in program spending due to the first year of Canadian Agricultural Partnership implementation, an increase in recoveries of $22.7 million under the Assistance to the Pork Industry Initiative and a $6.4 million decrease in the AgriStability program. These decreases are offset by a $14.7 million increase in the AgriInsurance Program due to timing of claims received and higher administrative costs, $8.1 million higher spending in connection with the Agricultural Marketing Programs Act, $6.5 million increase in spending in support of the implementation of the Dairy Farm Investment Program and the Dairy Processing Investment fund and a $3.0 million increase in the AgriInvest Program. The decrease of $3.4 million or 89% in Acquisition of land, buildings and works is mainly due to the timing of spending related to various projects as well as a decrease in spending for Federal Infrastructure Initiatives. The increase of $2.7 million or 2% in Personnel is primarily attributed to higher severance payments, full time equivalent (FTE) increases and higher salary rates as a result of the collective bargaining agreements .

Agriculture and Agri-Food Canada has total Revenue Spending authority of up to $57.1 million for 2018-2019. The revenue is generated from collaborative research agreements between Agriculture and Agri-Food Canada and third parties, 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 $13.4 million in revenues in the first quarter of 2018-2019 compared to $11.0 million for the same period last year. The $2.4 million revenue increase is primarily attributed to a $3.8 million increase due to timing of collections from other government departments for Information Technology services, and a $2.0 million increase in revenues associated with Collaborative Research and Development Agreements (CRADAs). These increases are offset by a $2.0 million decrease in revenue for the Community Pastures Program which is being wound down and a $1.3 million decrease associated with Industry led projects due to timing differences associated with signing new collaborative research agreements for the new Canadian Agricultural Partnership.

Table 3: Budgetary Expenditures by Standard Object (In thousands of dollars) [1]
Expenditures 2018-2019 2017-2018 Variances Percent
Personnel 122,404 119,751 2,653 2%
Transportation and communications 2,567 2,508 59 2%
Information 1,442 1,232 210 17%
Professional and special services 12,321 13,249 (928) (7%)
Rentals 2,802 2,715 87 3%
Repairs and maintenance 1,509 1,658 (149) (9%)
Utilities, materials and supplies 5,296 5,461 (165) (3%)
Acquisition of land, buildings and works 431 3,790 (3,359) (89%)
Acquisition of machinery and equipment 2,190 2,309 (119) (5%)
Transfer payments 37,283 47,277 (9,994) (21%)
Other subsidies and payments 4,208 2,556 1,652 65%
Total Gross Budgetary Expenditures 192,453 202,506 (10,053) (5%)
Less: Revenues netted against expenditures 13,424 11,003 2,421 22%
Total Net Budgetary Expenditures 179,029 191,503 (12,474) (7%)

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 has established processes to identify, assess, monitor, and respond to a variety of corporate, operational, program and project-level internal and external risks. On an annual basis, the Department identifies risks in fulfilling its Core Responsibilities, develops response strategies and monitors the effectiveness in managing those risks. These risk activities promote value for money, lead to more effective service delivery and efficient use of resources as well as better project management.

In the current environment, supporting employees dealing with pay issues is a top priority for the Department, with emphasis on proactively mitigating risk by ensuring mandatory training and roles and responsibilities are well understood, and by actively supporting departmental employees with escalation and pay advisory services. Agriculture and Agri-Food Canada implemented a Pay Liaison Team to help resolve pay issues and stabilize the pay system. The Department has also provided emergency salary advances and priority payments to employees experiencing hardship due to pay issues. Agriculture and Agri-Food Canada will continue to mitigate the issues arising with the implementation of the Phoenix pay system and to monitor any salary payments adjustments that may be required.

Significant changes in relation to operations, personnel and programs

Programs

April 1, 2018 marked the official launch of the Canadian Agricultural Partnership (CAP). The CAP is a five year, $3 billion commitment by federal, provincial, and territorial governments to strengthen the agriculture and agri-food sector. This includes $2 billion in cost-shared programs delivered by provinces and territories and $1 billion in federal activities and programs. The Partnership aims to continue to help the sector grow trade, advance innovation while maintaining and strengthening public confidence in the food system and increase its diversity. Under the Partnership, business risk management (BRM) programs will continue to help producers manage significant risks that threaten the viability of their farm and are beyond their capacity to manage.

Approval by Senior Officials

Approved by:

Original signed by
Chris Forbes, Deputy Head
Ottawa, Canada

Original signed by
Pierre Corriveau, Chief Financial Officer
Ottawa, Canada

Statement of Authorities (unaudited)
For the quarter ended June 30, 2018
(In thousands of dollars)
Fiscal year 2018-2019 (1) Fiscal year 2017-2018 (1)
Total available for use for the year ending March 31, 2019 (2) Used during the quarter ended June 30, 2018 Year to date used  at quarter-end 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
Vote 1 - Net Operating expenditures $568,454 $122,958 $122,958 $541,800 $124,066 $124,066
Vote 5 - Capital expenditures 54,888 1,874 1,874 74,990 5,175 5,175
Vote 10 - Grants and contributions 425,525 8,191 8,191 375,882 14,729 14,729
Budgetary statutory authorities (3) 1,476,391 46,006 46,006 1,313,690 47,533 47,533
Total Budgetary authorities 2,525,259 179,029 179,029 2,306,362 191,503 191,503
Total authorities $2,525,259 $179,029 $179,029 $2,306,362 $191,503  $191,503

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, 2018
(In thousands of dollars)
Fiscal year 2018-2019 (1) Fiscal year 2017-2018 (1)
Planned expenditures for the year ending March 31, 2019 Expended during the quarter ended June 30, 2018 Year to date used  at quarter-end Planned expenditures for the year ending March 31, 2018 Expended during the quarter ended June 30, 2017 Year to date used at quarter-end
Expenditures:
Personnel $500,315 $122,404 $122,404 $470,488 $119,751 $119,751
Transportation and communications 11,304 2,567 2,567 11,649 2,508 2,508
Information 5,956 1,442 1,442 6,156 1,232 1,232
Professional and special services 90,784 12,321 12,321 104,330 13,249 13,249
Rentals 5,664 2,802 2,802 2,685 2,715 2,715
Repair and maintenance 11,369 1,509 1,509 17,193 1,658 1,658
Utilities, materials and supplies 38,616 5,296 5,296 44,288 5,461 5,461
Acquisition of land, buildings and works 51,820 431 431 31,928 3,790 3,790
Acquisition of machinery and equipment 31,053 2,190 2,190 47,851 2,309 2,309
Transfer payments 1,827,049 37,283 37,283 1,618,306 47,277 47,277
Other subsidies and payments 8,399 4,208 4,208 8,621 2,556 2,556
Total gross budgetary expenditures 2,582,328 192,453 192,453 2,363,495 202,506 202,506
Less Revenues netted against expenditures:
Vote-netted revenues 57,069 13,424 13,424 57,133 11,003 11,003
Total Revenues netted against expenditures 57,069 13,424 13,424 57,133 11,003 11,003
Total net budgetary expenditures $2,525,259 $179,029 $179,029 $2,306,362 $191,503 $191,503

Note:
(1) Totals may not add due to rounding.

Appendix A

Budgetary Statutory Authorities Breakdown (unaudited)
For the quarter ended June 30, 2018
(in thousands of dollars)
Fiscal year 2018-2019 (1) Fiscal year 2017-2018 (1)
Planned expenditures for the year ending March 31, 2019 Expended during the quarter ended June 30, 2018 Year to date used  at quarter-end Planned expenditures for the year ending March 31, 2018 Expended during the quarter ended June 30, 2017 Year to date used at quarter-end
Contributions to employee benefit plans $65,526 $16,381 $16,381 $63,449 $15,695 $15,695
Minister of Agriculture and Agri-Food - Salary and motor car allowance 86 22 22 84 21 21
Contribution payments for the AgriStability program 384,830 (5,857) (5,857) 219,300 1,068 1,068
Contribution payments for the AgriInsurance program 623,000 20,658 20,658 640,800 6,005 6,005
Grant payments for the AgriInvest program 138,148 34,461 34,461 126,200 31,017 31,017
Payments in connection with the Agricultural Marketing  Programs Act 65,900 5,389 5,389 65,900 (2,677) (2,677)
Grant payments for the AgriStability program 39,320 (97) (97) 41,000 (597) (597)
Contribution payments for the AgriInvest program 18,602 - - 17,500 402 402
Loan guarantees under the Canadian Agricultural Loans Act 13,111 9 9 13,111 (3) (3)
Contributions in support of the Assistance to the Pork Industry Initiative (25,210) (25,210) - (2,502) (2,502)
Grants to agencies established under the Farm Products Agencies Act 100 - - 100 - -
Contribution payments for the Agricultural Disaster Relief  Program (ADRP)/AgriRecovery 118,513 118,513 - -
Canadian Pari-Mutuel Agency Revolving Fund (781) (781) - (1,147) (1,147)
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets 9,255 1,291 1,291 7,732 416 416
Contributions for agricultural risk management - Enhanced Spring Credit Advance program Business Risk Management - (89) (89) - (145) (145)
Class grant payments for the Transitional Industry Support program - (2) (2) - - -
Class grant payments for the Farm Income program - 2 2 - - -
Grant payments for the Canadian Agricultural Income Stabilization program Inventory Transition Initiative - (9) (9) - (6) (6)
Contribution payments for the Canadian Agricultural Income Stabilization program Inventory Transition Initiative (163) (163) - (13) (13)
Grants in support of the Grain and Oilseed Payment program - - - - (1) (1)
Budgetary statutory authorities $1,476,391 $46,006 $46,006 $1,313,690 $47,533 $47,533

Note:

(1) Totals may not add due to rounding.

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