Agriculture and Agri-Food Canada

Agriculture and Agri-Food Canada

June 15, 2005 14:40 ET

AAFC: CAIS Program Update

OTTAWA, ONTARIO--(CCNMatthews - June 15, 2005) - The Canadian Agricultural Income Stabilization (CAIS) program was officially implemented in December, 2003. Since then, significant assistance has been delivered to producers through CAIS and a number of changes have been implemented to make the program more responsive to the needs of producers.

CAIS helps producers protect their farm income from both small and large declines due to circumstances beyond their control. A payment is made when a producer's farm income (eligible income minus eligible expenses) in a particular year falls below the producer's reference margin (average income from previous years). CAIS and Production Insurance are the cornerstone government programs for helping producers manage business risks.

A total of 149,258 producers across the country have joined the Canadian Agricultural Income Stabilization (CAIS) program for 2005. The deadline to apply was May 31, 2005. The total value of reference margins protected under the program for 2005 is $8.5 billion (Note: reference margin figures not available for Quebec).



To date, CAIS has paid a total of $1.7 billion to Canadian producers.
This includes:

- $1.2 billion for the 2003 program year.
- $464 million for the 2004 program year through interim payments and
special advances.
- Producers are also applying for and receiving benefits for the 2005
program year through interim payments.

Media are invited to attend a technical briefing on the CAIS program:

- Date: Friday, June 17
- Time: 1:00 p.m. (EST)
- Location: Sir John Carling Building, 930 Carling Avenue, Ottawa,
On, Room 165
- Phone in details: Reporters may also attend the briefing via
conference call. For information on how to register and for a copy
of the briefing deck, please contact AAFC media relations at
1-866-345-7972


In response to concerns from producers, Federal, Provincial and Territorial Ministers of Agriculture have made a number of changes to the CAIS program. As an interim measure, while alternatives to the deposit are under discussion, producers can now withdraw all of their funds deposited to CAIS accounts. This will provide much needed cash flow, as producers will now have access to more than $603 million in their accounts.

If an alternative is not agreed upon, the deposit remains in place. However, the deadline for 2003, 2004 and 2005 deposits has been extended to March 31, 2006. Producers will not have to make the full deposit. The simplified one third deposit will remain in place for 2005.

Further changes to CAIS will be discussed when Ministers meet in July. Discussions on possible program changes are currently being undertaken with industry through the National CAIS Committee (NCC), which includes 22 producer representatives and officials from both levels of government. Federal and provincial industry advisory committees are also involved in discussions on how to improve the program.

Items currently under discussion with industry include alternatives to the deposit, a more proactive advance under CAIS, administrative improvements, inventory valuation, reference margins and the link between CAIS and Production Insurance to ensure that producers are encouraged to participate in both programs.


STATUS OF THE CAIS PROGRAM

Backgrounder


A number of changes have been implemented to make CAIS more responsive to the needs of producers. Governments continue to work with industry on program issues and these issues will be on the agenda when Ministers meet in July. Discussions with industry are taking place through the National CAIS Committee (NCC) and federal and provincial industry advisory committees. Program changes are being discussed in context of the objectives of the CAIS program.

Program objectives:

The Canadian Agricultural Income Stabilization (CAIS) program helps producers protect their operation from both small and large declines in farm income. Support is based on a producer's individual reference margin (eligible income minus eligible expenses), which reflects average income from previous years. A payment is made when the producer's income in the program year falls below the producer's individual reference margin. CAIS was designed to:



- Be an ongoing program combining both stabilization and disaster
protection. Previously, disaster programs were ad hoc and
unpredictable.

- Encourage sound farm management practices and marketing decisions.
Assistance is based on an individual's reference margin, which
means producers have more protection under the program by
maintaining their farm income.

- Be cost shared by producers and governments. Business Risk
Management programs including CAIS have been designed based on the
key principle of producers sharing responsibility with governments
for replacing lost farm income.

- Require a decision from the producer on participation prior to the
production year.

- Target assistance to those who have experienced a decline in farm
income.

- Complement the Production Insurance program.

- Be compliant with Canada's trade obligations under the World Trade
Organization (WTO).


Program changes to date:

A number of changes have already been implemented to make CAIS more responsive to the needs of producers. Following are program changes which have taken place over the last year:

The CAIS deposit currently remains in place. However, the deadline for 2003, 2004 and 2005 deposits has been extended to March 31, 2006. Producers will not have to make the full deposit. The simplified one third deposit will remain in place for 2005.

As an interim measure while deposits are under discussion, the program was changed in March 2005 to allow producers to access any funds in their accounts over the minimum 1/3 deposit. On June 10, the program was changed to allow producers access to all of the funds which they have deposited in their CAIS accounts. This will provide significant cash flow assistance to producers, who have approximately $603 million in their accounts.

In April 2005, the National CAIS Committee (NCC) was established. Through this committee, producers and both levels of government will work together on CAIS design and delivery issues. The NCC includes 22 producer representatives and 15 officials representing both levels of government. The committee has held two meetings and will meet again in the fall of 2005.

In March 2005, the deposit deadline for the 2003, 2004 and 2005 CAIS program was extended to March 31, 2006.

In May 2004, three key changes were made to the program:



- Negative margins were covered under CAIS. Negative margins occur
when a producer's eligible expenses are greater than eligible
income.

- The payment cap was increased from $975,000 to $3 million in
recognition of the changes in the structure of the agriculture
industry.

- The deposit requirement was simplified so that producers could
secure protection with only 1/3 of the full deposit required for
2003 and 2004.

As changes were made to the program, participation deadlines were
extended to allow more producers to consider the changes and make a
decision about participation. As a result, 138,281 producers
participated for 2003 and 143,876 producers participated for 2004.

Program changes under discussion:

Changes to the program are being discussed in context of the
objectives outlined above. Discussions are being held with industry
through the National CAIS Committee (NCC) and also federal and
provincial industry advisory committees on a number of program issues
which will be on the agenda for discussion when Ministers meet in
July:

- Alternatives to the deposit
- Advance payments
- Improvements to program delivery
- Inventory valuation
- Reference margins
- The link between the CAIS and Production Insurance programs

For more information:

- The CAIS program is delivered by the Government of Canada's CAIS
Administration in British Columbia, Saskatchewan, Manitoba, New
Brunswick, Nova Scotia, Newfoundland and Labrador and the Yukon.

- For more information, contact the CAIS administration toll free at
1-866-367-8506 or visit the CAIS program Web site at
www.agr.gc.ca/caisprogram.

In remaining provinces, the program is delivered provincially:

- In Alberta, call Agriculture Financial Services Corporation (AFSC)
at 1-877-744-7900.
- In Ontario, call AGRICORP at 1-877-838-5144.
- In Quebec, call La Financiere agricole du Quebec at 1-800-749-3646.
- On Prince Edward Island, call 1-902-368-4842.


Contact Information

  • Agriculture and Agri-Food Canada, Ottawa
    Media Relations
    (613) 759-7972 or (866) 345-7972
    or
    Minister's Office, Ottawa
    Elizabeth Whiting
    (613) 759-1059