AgriStability Program Handbook

Transcription

1 AgriStability Program Handbook Delivered by SCIC Saskatchewan Crop Insurance Corporation

2 Contents HERE AT EVERY TURN WHAT IS AGRISTABILITY? HOW AGRISTABILITY WORKS ENROLLING IN THE PROGRAM New Producers Participating in AgriStability TRIGGERING A PAYMENT AGCONNECT PROGRAM YEAR MARGIN INVENTORY ADJUSTMENTS REFERENCE MARGIN Limited Reference Margin 8 HOW TO APPLY 13 INTERIM BENEFIT 2

3 PROGRAM FEES Ending Participation Contact Persons Program Fee Calculation WHAT INFORMATION IS REQUIRED? Allowable Income and Expenses Supplemental Information PROCESSING APPLICATIONS Structural Change Calculating Structural Change REQUEST FOR INFORMATION COMBINING OPERATIONS CALCULATION OF BENEFITS Amendments Appeals CUSTOMER SERVICE OFFICES 19 DEEMING CROP INSURANCE BENEFITS 24 CONTACT INFORMATION 3

4 Here At Every Turn We strive to provide an exceptional customer experience to the farmers and ranchers of Saskatchewan through diverse programs and superior service. At SCIC, we understand the challenges you face because we re producers too. That s why our team works with industry to build strong programs that meet the needs of Saskatchewan producers. SCIC s business risk management (BRM) programs work together to provide comprehensive coverage. SCIC is responsible for administering the following programs: Crop Insurance protects from in-season crop losses AgriStability protects from whole farm margin losses Wildlife Damage Compensation Program provides compensation and prevention for crop or livestock losses due to wildlife Western Livestock Price Insurance Program enables livestock producers to protect against unexpected price declines CROP INSURANCE & AGRISTABILITY WORK TOGETHER When producers sign up for Crop Insurance, they have coverage from the start of the seeding season until harvest is complete. Through AgriStability, producers have even further coverage for other uncontrollable events throughout the year. Unforeseen circumstances like rising input costs or falling commodity prices are covered through AgriStability. When combined, Crop Insurance and AgriStability offer extensive coverage that protects the bottom line for Saskatchewan farms and ranches. WE RE HERE FOR YOU SCIC provides local service to Saskatchewan producers and continues to focus on meeting the changing needs of the province s agriculture industry. We are committed to providing responsive and responsible programs and encourage producers to review their coverage to ensure they have the support they need. Knowledgeable staff are available at 22 SCIC locations across the province to assist producers, accountants and form preparers. To protect from production losses and large margin declines, consider Crop Insurance and AgriStability as part of a comprehensive risk management plan for your farm. 4

5 What is AgriStability? AgriStability is designed to help farm operations facing large margin declines caused by production loss, increased costs or market conditions. AgriStability is an affordable, low-cost Business Risk Management (BRM) program offering: protection for your whole farming operation financial support to help offset large margin declines personalized coverage based on your farm history program information accessible anytime, anywhere with AgConnect AgriStability is a national program under the Canadian Agricultural Partnership (CAP) agreement on agriculture policy. CAP is a federal-provincial-territorial funding agreement that governs BRM programs, such as AgriStability and AgriInvest, to support Canadian agriculture. In Saskatchewan, SCIC has administered the AgriStability Program since the 2009 program year. However, AgriInvest is administered by Agriculture and Agri-Food Canada. The information submitted by corporations, cooperatives and other entities for AgriStability is collected by SCIC and forwarded for the AgriInvest Program. AgriInvest helps producers manage small income declines and provides support for investments to mitigate risks or improve market income. To learn more about AgriInvest visit or call the federal toll-free line at

6 How AgriStability Works If your program year margin falls 30 per cent below your reference margin, due to any combination of production loss, adverse market conditions or increased costs, AgriStability could provide a payment. Your program year margin is calculated each year. When the program year declines by more than 30 per cent of the reference margin, an AgriStability payment will be triggered. The payment provides 70 cents for every dollar of decline below the trigger point. $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $0 = Year 1 Year 2 Year 3 Year 4 Year 5 Reference Margin 30 % lower Program Year Margin Trigger Point 70 /dollar benefit 6

7 Enrolling in the Program Like insurance for your house, car or crops, you sign up before something goes wrong. Enrol in AgriStability by April 30, and then you go about your regular business, knowing AgriStability will help in the event the unexpected happens. NEW PRODUCERS For AgriStability purposes, new producers are those who have not participated in the program before. An Enrolment Fee Notice will be issued based on your intended production. It is your responsibility to ensure you have met all of the eligibility requirements noted in the Participating In AgriStability section in order to have your current program year application processed. Simplified Participation: New producers in the AgriStability program have the option of submitting either the previous three years or five years of historical information. PARTICIPATING IN AGRISTABILITY To be eligible to participate in the AgriStability Program, you must derive income from the primary production of agricultural commodities, provided in the program year you have: carried on the business of farming in Canada and reported farming income (or loss) for income tax purposes; completed a minimum of six consecutive months of farming activity; completed a production cycle; and submitted the required information by the deadlines. 7

8 How to Apply Applying for AgriStability is as simple as calling the SCIC AgriStability Call Centre and requesting a new participant package. The request must be made by April 30 (Enrolment/Fee Deadline) of the program year in which you wish to participate. Once enrolled in the AgriStability Program, you will receive an Enrolment/Fee Notice annually. The Enrolment/Fee Notice identifies the program fee and Administrative Cost Share (ACS) fee. You must pay the program fee and ACS fee by the required deadline to be eligible for benefits. Producers do not need to provide historical farm information to have an Enrolment/Fee Notice generated. However, your historical information is required in order to process the application. All producers participating in AgriStability must complete and submit a Participant Initial Declaration. The Participant Initial Declaration explains the rights and responsibilities of producers participating in AgriStability. It must be signed and returned to SCIC by all producers participating in AgriStability and/or the official signing officer(s). 8

9 AgConnect Access your AgriStability information online anywhere, anytime. At SCIC, we put our producers needs first. And we understand you need your information available whenever it s convenient for you. That is why SCIC developed a web-based application called AgConnect. Log in to your secure AgConnect account to: access your information in one place; available online 24/7 eliminate tracking paper files complete and submit your program forms online send supporting documents electronically view important historical information view detailed program figures view previous Calculation of Benefits and program fees We can help you get connected To begin using AgConnect, contact the SCIC AgriStability call centre at

10 Program Year Margin The current year s financial profile for the farm or ranch is called the program year margin. It is based on the income and expenses directly related to the farming operation and includes accrual adjustments. Allowable income and expenses ensure AgriStability coverage is restricted to production or price declines, rising input costs and market losses. The program year margin also includes accrual adjustments that measure changes in the value of a producer s accounts receivable, accounts payable, purchased inputs, deferrals and commodity inventories. Inventory changes are valued using fair market values. Essentially, if the farm s inventory value increases, it increases the program year margin; if the farm s inventory value decreases, it decreases the program year margin. Triggering a Payment When the program year margin declines by more than 30 per cent of the reference margin, an AgriStability payment is triggered. Payments can be triggered by the combined effects of several factors that on their own might not trigger a payment. One situation may offset another. A bumper crop could offset the effects of poor commodity prices or increased expenses. Higher cattle prices could offset increased feed expenses. All of these factors are taken into consideration when determining the program year margin. Low Yields Poor Quality Cattle Market Price Drops Increased Crop Input Expenses 10

11 Inventory Adjustments Inventory Adjustment is the difference between what you have on-hand at the start of the fiscal year, compared to what you have on-hand at the end of the fiscal year. Crop and livestock inventories for market commodities are valued using both an opening price (P1) and a year-end price (P2). Breeding animals and culled breeding animals, which are not considered market commodities, are valued using a year-end (P2) price only. Sold Grain Harvested Grain Start of the Year End of the Year Sold Cattle 11

12 Reference Margin Your historical financial information is used in the calculation of AgriStability benefits to accurately reflect your farming operation. The program year margin is compared to the reference margin from the previous five years. The reference margin is determined by excluding the highest and lowest margins in the previous five years and averaging the remaining three. If your farm or ranch is newly enrolled in AgriStability or has been operating for less than five years, the reference margin will be based on the three most recent margins (if available). If three years are not available, the reference margin will be based on industry averages and standards. New participants will only be required to submit the previous three years of historical financial information as well as the supplemental information. LIMITED REFERENCE MARGIN AgriStability benefits are calculated using the lower of: the conventional reference margin; or the average allowable expenses in the same years used to calculate the conventional reference margin. If the allowable expenses are used, the reference margin is limited. The reference margin limit (RML) will never be less than 70 per cent of the conventional reference margin. NEGATIVE MARGINS A negative program year margin occurs if your allowable expenses exceed your allowable income after adjustments for changes in inventory valuation, receivables, payables and purchased inputs. Negative margins are protected under the AgriStability Program. Conventional Reference Margin The conventional reference margin is determined by excluding the highest and lowest program margins in the previous five years and averaging the remaining three. The margin used for AgriStability benefit calculation will never be less than 70% of conventional reference margin. Reference Margin Limit Benefits are calculated using the lower of the conventional reference margin or the average allowable expenses. Adjust to 70% of CRM CRM RML 12 Conventional Reference Margin Reference Margin Limit

13 Interim Benefit The interim benefit gives you the option of receiving funds prior to the completion of your fiscal period in the program year. This can help support losses and cover costs. The benefit is based on the estimated margin decline or loss for the year when compared to the reference margin (historical average). Just like the final AgriStability benefits, your margin decline must be at least 30 per cent below your reference margin to access a payment. To be eligible for an Interim Payment, you must have completed a production cycle and six consecutive months of farming activity in that program year. Interim benefits are generally issued at 50 per cent of the estimated final benefit, to reduce the risk of overpayment. Producers who receive an interim benefit payment must submit their final program forms by the required deadlines. Receive 50 per cent of estimated interim benefit Receive remaining balance of benefit EXAMPLE: Lower crop yields Fiscal year Program year Apply for benefit Submit final program forms 13

14 Program Fees All producers participating in AgriStability must pay annual fees. The program fee is $4.50 for every $1,000 of covered Contribution Reference Margin, multiplied by 70 per cent. This works out to be $315 for every $100,000 of reference margin. A $55 fee is also applied to help cover administrative costs. ENDING PARTICIPATION Once enrolled, your AgriStability coverage will continue until it is cancelled. Each year an Enrolment/Fee Notice is sent to all participating producers. If you do not want to participate, you must return the Enrolment/Fee Notice with the cancel participation option selected, by the stated deadline. If that date is missed, your coverage will be considered active for the year and the program fees will need to be paid. CONTACT PERSONS In naming a contact person, you authorize that person to receive, provide or make changes to information on your behalf concerning the AgriStability Program. When SCIC requires additional information, they will contact the parties listed as your contact person(s) prior to contacting the participant. Written correspondence may be sent to both you and your contact person. Your contact person will stay the same unless you request a change, which can be done by completing the Change Contact Person form, available at Cancel Participation forms are available on the SCIC website at Complete this form and notify SCIC by the applicable deadline if you wish to cancel your enrolment. 14

15 Program Fee Calculation = $ 100,000 Year 1 Year 2 Year 3 Year 4 Year 5 Contribution Reference Margin $100, % = $70, $315 The program fee is $4.50 for every $1,000 of covered Contribution Reference Margin, + $ 55 multiplied by 70 per cent. This works out to = be $315 for every $100,000 of reference margin. A $55 fee is also applied to help cover administrative costs. Based on a 100,000 dollar reference margin $ Program fee:

16 What Information is Required? To calculate program benefits, SCIC requires financial and supplemental information. ALLOWABLE INCOME AND EXPENSES Allowable income and expenses are those directly related to producing and selling agriculture commodities. Individuals (sole proprietors) must provide the income and expense information on the T1163 and T1164 forms and submit them to the Canada Revenue Agency (CRA). This information is then forwarded to SCIC for the AgriStability Program. SCIC also accepts individual producers income and expense information through AgConnect. Corporations, co-operatives and other entities are to submit all their income and expense information directly to SCIC using AgConnect or the Corporations, Co-operatives and Other Entities form. SUPPLEMENTAL INFORMATION The additional information used to adjust a producer s program margin is called supplemental information. This information includes changes in a producer s inventory, accounts payable, accounts receivable, purchased inputs and deferrals. AgriStability adjusts program margins using supplemental information to ensure the program margin represents the overall financial view of the farming operation. For all types of farming operations, supplemental information is submitted directly to SCIC through AgConnect or on the appropriate form: For individuals (sole proprietors) Supplemental Information form; For corporations, co-operatives, other entities Corporations/Co-operatives/Other Entities form. All forms and guides can be found at 16

17 Allowable Income and Expenses Allowable Income Allowable Expenses Agricultural commodity sales Rebates for allowable expenses Wildlife damage compensation payments Crop/hail insurance payments Select allowable payments WLPIP payments Commodity purchases Containers and twine Fertilizer and lime Pesticides and other chemicals Insurance premiums (crop production, hail) Veterinary fees, medicine, A.I. fees Minerals and salts Machinery (gasoline, diesel fuel, oil) Electricity Freight and shipping Heating fuel Arm s length salaries Storage/drying Prepared feed Insurance or other premiums for allowable income and expense items Commodity futures transaction fees Commissions and levies Point of sale adjustment Allowable income and expenses are those directly related to producing and selling agriculture commodities. Corporations SCIC Income, expense and supplemental info Submit all program information to SCIC using AgConnect and/or the Corporations/Co-operatives/ Other Entities form. Individuals CRA SCIC T1163 and T1164 forms Supplemental info Submit income and expense information to the CRA. This can also be sent to SCIC using AgConnect. Send supplemental information to SCIC using AgConnect and/or the Supplemental Information form. 17

18 Processing Applications STRUCTURAL CHANGE From time to time, a farming operation s size may change. This could include expanding acres, reducing acres, growing something new, reducing herd sizes, etc. This type of change is called structural change. When this occurs, the farming operation s income and expenses will be different than what occurred in the past. As a result, the farm s historical reference margin is no longer a good comparison for the current program margin. To provide a more accurate comparison, AgriStability adjusts the farming operation s reference margin to reflect the farm size and type in the program year. CALCULATING STRUCTURAL CHANGE Each year SCIC reviews your file to determine whether a structural change adjustment is necessary. For each year in your reference margin, an adjustment is made based on the farming operation s current productive units. This calculation ensures your historical reference margin is an accurate reflection of what the margin would have been, had the operation remained the same size and scale as in the program year. If the structural change represents $5,000 and at least a 10 per cent difference in your margin, it will be subject to structural change adjustments. 18

19 Structural Change An example of a structural change decrease is a reduction in acres and/or herd size. An example of a structural change increase is an increase of acres and/or herd size. Structural Change Adjustment 1000 acres 1000 acres 2000 acres 3000 acres 5000 acres 5000 acres Year 1 Year 2 Year 3 Year 4 Year 5 Program Year Deeming Crop Insurance Benefits A producer who did not participate in Crop Insurance may have their AgriStability benefit reduced. This reduction occurs only in cases where the producer has a negative program year margin and does not have Crop Insurance at the 70 per cent coverage level. In those circumstances, the producer will have the negative portion of their program year margin benefit reduced by 70 per cent of a deemed Crop Insurance benefit. The deemed Crop Insurance benefit represents the claim a producer would have received, had they participated in Crop Insurance, less the premium that they would have paid to participate in the program. 19

20 Request for Information Incorrect information can impact the calculation of future benefits even if you are not in a claim position for that year. When SCIC staff are reviewing and processing AgriStability files, an adjustment to a producer s information is sometimes required. For example, SCIC may identify differences between your sales and inventory figures which require clarification. If this occurs, you and/or your contact person will be asked to provide additional information to clarify the reported figures. When SCIC requests additional information to process a file, it is important to provide that information within the required time frame. If the information is not provided, your file will be considered incomplete and a Calculation of Benefits will not be generated until the information is received. Additionally, as reference margins are calculated based on historical information, incorrect information can impact the calculation of future benefits even if you are not in a claim position for that year. It is important to keep your information up-to-date as this will ensure timely processing of your applications. Combining Operations SCIC encourages producers to indicate if their operations should be combined. SCIC will also combine operations where it is determined the entities are a part of a whole farm, even if reporting separately for income tax purposes. SCIC considers the following criteria when entities should be combing operations: the operations are not legally, financially or operationally independent; or all or some of the transactions between the operations are above or below fair market value. By combining operations that are not independent of each other, SCIC ensures AgriStability benefits are directed to producers that have experienced a decline in their program margin beyond their control. 20

21 Calculation of Benefits When SCIC has completed processing your AgriStability application, a Calculation of Benefits (COB) is generated detailing your income, expense and supplemental information for both the program years and reference years. A short summary showing how SCIC determined the final calculation and the new reference margin is mailed to you, once the file has been completed. The complete version of the COB (normally pages) can be can be mailed upon request or accessed using AgConnect. AMENDMENTS After reviewing the COB, you and/or your contact person may notice missing or incorrect information. For example, you may find your sales figures are not correct and/or the inventory figures used were not accurate. If this occurs, an amendment can be submitted to correct the information. Amendments must be submitted in writing directly to SCIC. When submitting amendment information to SCIC, complete the Amendment Request form found at An amendment can be submitted up to 18 months from the date on a your original COB. Information received after the amendment deadline will be used to update that reference year only. APPEALS If you feel the program rules were not correctly applied in the processing of your application, you may request a review of the application by SCIC. If SCIC cannot resolve the concerns, the request may be referred to an appeal panel. The Provincial Appeal Panel is an independent advisory committee of producers that hears disputes between customers and SCIC. Customers and staff both have the opportunity to present information to the Panel during the hearings held around the province. The Panel will review appeals in accordance with procedures established by SCIC and the agreements governing the program. The Panel does not have the ability to create exceptions to program policies. All recommendations made by the Panel are considered non-binding and are reviewed by SCIC s Board of Directors for a final decision. Appeals must be submitted in writing to SCIC within 90 days of the date you were notified of the decision which is being appealed. The Appeal Submission form found at appeals can be used and should be accompanied by an appeal letter, which must clearly identify the nature of the appeal and provide sufficient information and documentation to substantiate the appeal. Appeal requests can be sent to: AgriStability Program Appeals 484 Prince William Drive PO Box 3000 Melville, SK S0A 2P0 Fax:

22 Deadlines MARCH 31 Submit your interim application. APRIL 30 Request Enrolment/New Participant Package. Cancel participation in the program year (or 30 days from the date on your Enrolment/Fee Notice, whichever is later). Pay program fee without penalty (or 30 days from the date on your Enrolment/Fee Notice, whichever is later).* SEPTEMBER 30 Submit your AgriStability program forms without penalty.** DECEMBER 31 Submit your AgriStability program forms with penalty. Pay your program fee with penalty. If you do not pay your fee by December 31, you will be ineligible to receive benefits for that program year. *Fees paid after April 30 (or 30 days from the date on your Enrolment/Fee Notice, whichever is later) will have a 20 per cent penalty added. **If you miss the September 30 deadline to submit your AgriStability program forms, you have until December 31 to submit your form with penalty. A penalty of $500/month will be deducted from your benefit. If no benefit is calculated there will be no penalty applied. 22

23 Customer Service Offices Assiniboia Box st Ave. W. Assiniboia, SK S0H 0B Davidson Box Lincoln St. Davidson, SK S0G 1A Estevan Box 1716 #5-419 Kensington Ave. Estevan, SK S4A 1C Humboldt Geschaft Centre Box th Ave. Humboldt, SK S0K 2A Kindersley Unit th Ave. E. Kindersley, SK S0L 1S Leader Box 387 # st Ave. W. Leader, SK S0N 1H Moose Jaw 45 Thatcher Dr. E. Moose Jaw, SK S6J 1L Moosomin Box Carleton St. Moosomin, SK S0G 3N North Battleford Kramer Place # nd St. North Battleford, SK S9A 1E Preeceville Box Hwy. Ave. E. Preeceville, SK S0A 3B Prince Albert Box Central Ave. Prince Albert, SK S6V 6G Raymore Box Main St. Raymore, SK S0A 3J Regina 515 Henderson Dr. Regina, SK S4N 5X Rosetown Box nd Ave W. Rosetown, SK S0L 2V Saskatoon 3830 Thatcher Ave. Saskatoon, SK S7R 1A Shaunavon Box rd Ave. E. Shaunavon, SK S0N 2M Swift Current E.I. Wood Building # Cheadle St. W. Swift Current, SK S9H 4G Tisdale Box th St. Tisdale, SK S0E 1T Turtleford Box A Main St. Turtleford, SK S0M 2Y Weyburn Box 2003 # Souris Ave. N.E. Weyburn, SK S4H 2Z Yorkton 38 5th Ave. N. Yorkton, SK S3N 0Y Ce livret est aussi disponible en français. 23

24 Contact Information AGRISTABILITY CALL CENTRE Toll Free: (Monday to Friday, 8 a.m. to 5 p.m.) Fax: (Toll-Free) agristability@scic.gov.sk.ca SASKATCHEWAN CROP INSURANCE CORPORATION Head Office Box Prince William Drive Melville, SK S0A 2P0 Office Hours: Monday to Friday, 8 a.m. to 5 p.m. Closed statutory holidays CANADA REVENUE AGENCY TAX CENTRE Box 14001, Station Main Winnipeg, MB R3C 3M3 Toll Free: AGRICULTURE AND AGRI FOOD CANADA AGRIINVEST ADMINISTRATION Box 3200 Station Main Winnipeg, MB R3C 5R7 Toll Free Phone: Toll Free Fax: Outside of Canada: Phone: Fax: Hours of Operation: 8 a.m. to 5 p.m. CST, Monday to Friday 24