Proposed Changes to the Agricultural Marketing Programs Regulations. July 2015

Transcription

1 Proposed Changes to the Agricultural Marketing Programs Regulations July 2015

2 Purpose To brief you on the proposed regulatory amendments related to the amendments made to the Agricultural Marketing Program Act (AMPA) in regards to the Advance Payments Program (APP). 2

3 Changing the rules around the APP Several Changes to the AMPA have been implemented via the Agricultural Growth Act (AGA) and were brought into force on February 27, 2015, however, some of the legislative changes require related amendments to the AMPA Regulations. These proposed Regulatory Amendments were prepublished in the Canada Gazette Part I on July 11, 2015 for a 30 day consultation period. 3

4 Regulatory Amendment Processes The regulatory amendment process begins with the 30 day pre-publication period in the Canada Gazette Part I. Once all feedback is received, any required changes will be made and the regulations package is sent back to Treasury Board for approval before going for final publication in the Canada Gazette Part II. At the same time, the remaining amendments to the AMPA will be brought into force. This final step in the process will not likely take place until late

5 Section 1 - Interpretation This section defines any terms specific to the Regulations. The term Settlement Agreement would be removed, as it is no longer specified in the proposed calculation of Administrator s liability (section 3 of the Regulations). The term Financial Institution is added as it is used in the proposed section relating to eligible security and guarantors (sections 6.2 and 6.3). 5

6 Section 1.01 Related Producers The AMPA details a number of instances where producers are presumed to be related, but specifies that further presumptions can be listed in the Regulations. This new section in the Regulations improves the definition by specifying relatedness as: The producer is the spouse or common-law partner of the other producer. The producer is a shareholder/partner/member with at least 25% of shares or entitlement to profits of the other producer. This means that minority shareholders would not be deemed to be related to corporations/partnership/ cooperatives if they own less that 25% of the business. 6

7 Section 1.1 & 1.2 Prescribed Criteria This section lays out the rules for determining what criteria can be used to evaluate: The possibility for determining the average price of the agricultural product. Determining whether a product has been processed for the purpose of obtaining an advance. No changes have been made to this section. 7

8 Section 1.3 Livestock Section 1.3 adds 5 new products to the definition of livestock : rabbit, red deer, boar, goat and elk. These products would be treated the same as cattle, hog, sheep and bison in terms of security requirements. 8

9 Section 1.4 Eligible Products Section 1.4 designates elk antler velvet and bees and eligible products under the APP. 9

10 Section 1.5 Eligible Breeding Animals Section 1.5 designates specific classes of breeding animals to be eligible for APP advances. The common criteria being that they must be intended for sale in the program year for which the advance is made. 10

11 Section 2 Ownership and responsibility for marketing No changes are being proposed for this section. 11

12 Amendments Sections 3 & 4 Percentage of Liability Section 3 is being amended to simplify the administrator s percentage calculation as the existing calculation is complex. The new calculation would simply be: Sum of the previous 5 years outstanding defaults 10 months after the program year is over divided by Sum of the advances issued in those 5 years. Any defaults which are the result of a deceased or incapacitated producer are not counted towards the outstanding balance of defaults. Section 4 has been deleted because the Administrator s liability is taken off of the advance rate prior to issuance and the Minister is now liable for 100% of any advances issued. 12

13 Amendments Section 5 Attribution The new Section 5 will detail all attribution rules (previously split between AMPA and the Regulations) The new section is intended only to attribute advances down to the individual shareholders/partners/members. Individuals limits ($100K/$400K) will ultimately limit corporate/partnership/cooperatives advances. 13

14 Amendments Section 6 and 6.1 Limits Currently, sections 6 and 6.1 set out different limits for repayments without proof of sale (Greater of 10% and $1,000) and for overpayments (Greater of 10% and $6,000). The proposal aligns these two limits to be the greater of 10% and $10,

15 Amendments Section Security With the amendments to AMPA, the Act will now point to the Regulations for specific security requirements. The proposed Regulations would now list all eligible security types by type of agricultural product (In production, already produced or livestock). The list would also be broad enough in its definitions to allow new types of security to be added at any time, provided they fit under these broad definitions. 15

16 Amendments Section Guarantors Under the AMPA, a producer with multiple partners/ shareholders/members must have joint and several guarantees signed, making each one responsible for the entire amount of the advance. This requirement can be challenging administratively. The AMPA has been amended to allow a single guarantor to sign and be held personally liable. The proposed regulations simply lists who can sign as a guarantor. 16

17 Amendments Section 7 (1) Conditions for Payment - Administrator A number of administrative changes are being proposed to section 7 which lists out the conditions upon which the Minister may honour the guarantee. The proposed regulations would amend 7 (1) to: Ensure that documentation supporting the request for payment accompanies a request by an administrator. Allow a file to be sent in where the producer has applied for any form of protection from their creditors (under any Act). Simplify the requirements administrators with respect to number of collection letters, and the requirement for proof of visits/phone calls. 17

18 Amendments Section 7 (2) Conditions for Payment - Lender The proposed regulations would amend 7 (2) to: Simplify the requirement on the lender by removing the requirement to provide producer level account details. 18

19 Amendments Section 8 - Repayments The AMPA was amended to allow the regulations to specify additional types of allowable repayments under the APP. The proposed regulations will deem the following as eligible repayments types: Without proof of sale where the producer is deceased or has become incapacitated. A repayment without proof of sale where the producer uses one or more of the security types listed in section 6.2. Producers may use proof of sale from any product for which he/she received an advance in that program year to repay advances taken out on any product. 19

20 Amendments Section 9 Stay of Default The AMPA was amended to allow the regulations to set the terms under which the Minister may grant a stay of default. The proposed regulation state that a stay of default could not be granted more than 4 months prior to impending defaults. 20

21 Amendments Section 10 Coming Into Force This section of the proposed Regulations simply ensures that certain provisions relating to specific sections of the Act would come into force only when those sections of the AMPA are brought into force. The intention is to bring all remaining section of the Agricultural Growth Act, which amends the AMPA, into force at the same time as the regulations are registered. 21

22 What s Next The intention is implement the remaining legislative amendments and the regulatory amendments by April 2016, when most APP production periods begin. This will include the implementation of 5 year advance guarantee agreements and repayment agreements. Work on these new documents can begin as early as this fall in order to provide ample time to have them in place for April Administrators who begin their Program year prior to April 1, should prepare for the likelihood of a dual year. 22

23 Official Feedback on the Proposed Regulations Please send all written feedback on the draft Regulations to: Rosser Lloyd, Director General Programs Branch, Agriculture and Agri-Food Canada 1341 Baseline Road Tower 7, Floor 7, Room 243 Ottawa, Ontario K1A 0C5 Telephone:

24 For further information Should you wish to discuss any of the draft Regulations or other APP program policy, please contact me at : Chris Levac A/Assistant Director, Programs Branch Agriculture and Agri-Food Canada / Government of Canada chris.levac@agr.gc.ca / Tel: