AgriStability Program Handbook 2020-2022

AgriStability program benefits are calculated by comparing a participant’s current year financial information to historical years to determine if there has been a shortfall.

For all years, whether current or historical, a Production Margin is calculated using tax and Supplementary Form information supplied by the participant. AgriStability allowable income less allowable expenses as reported for tax is the starting point. This net margin, which is usually cash basis, is adjusted to include accrual information from the Supplementary Forms and if applicable, other margin adjustments as determined by the Administrator.

Supplementary Form adjustments include accounts receivable and deferred income, accounts payable, purchased inputs and crop and livestock inventories. Crop and livestock inventories are valued using hybrid inventory valuation method.

For more information, please see the related technical information circulars:

• TIC 4: Hybrid Accrual Margins
• TIC 5: Stub Periods
• TIC 8: Inventory Valuation

What beginning farmers need to know

Allowable income is generally limited to the sale of agricultural commodities and production insurance payments. Allowable expense items are generally limited to input costs directly related to the production of agricultural commodities.

The income and expenses, as reported to CRA, that are considered allowable for the Program include, but are not limited to, the following:

Allowable income

• Agricultural commodity sales
• AgriInsurance proceeds
• Canadian Food Inspection Agency (CFIA)
• Commodity future gains
• Custom feeding*
• Insurance and other proceeds for allowable income and expense items
• Rebates for allowable expenses
• Specified program payments**
• Wildlife damage compensation

Allowable expenses

• Agricultural commodity purchases
• AgriInsurance premiums
• Commissions and levies (related to commodity sales)
• Commodity future losses/ transaction fees
• Containers and twine
• Custom feeding*
• Electricity
• Fertilizer and lime
• Freight and shipping (to and from market)
• Heating fuel
• Machinery (gasoline, diesel fuel, oil)
• Minerals and salts
• Other insurance/premiums for allowable
  income and expense items
• Pesticides
• Point of sale adjustments
• Prepared feed
• Salaries (arms length as defined by CRA)
• Storage/drying
• Veterinary fees, medicine, breeding fees

*Custom feedlot income and expenses are allowable if the feedlot makes an appreciable contribution to the growth and maturity of the livestock. For example in the case of cattle, the animals must be fed for more than 60 days or have an average gain of at least 90 kgs (200 lbs).

**To determine whether or not to include a program payment in allowable income in the program year and/or Reference Period, participants reporting tax in Alberta should refer to the Canada Revenue Agency’s RC4060 Farming Income and the AgriStability and AgriInvest Program Guide.

For more information, please see technical information circular TIC 3: Allowable vs Non Allowable and Part 4 of AgriStability Program Guidelines

The reference margin limit has been removed from AgriStability for 2021 and 2022. This change will have a significant impact for many producers and is retroactive to the 2020 program year. The 2020 program year has not been re-opened for enrolment.

Indemnity payments from private insurance programs that are fully producer-funded are non-allowable in the program year margin and allowable in the reference margin where they relate to:

• price or revenue insurance associated with the sale of allowable commodities
• price insurance associated with the purchase of allowable expenses
• production insurance covering the production of allowable commodities (e.g. private hail insurance)
• other income insurance, such as margin-based or guaranteed minimum income insurance

Indemnity payments from private insurance programs not outlined above, that compensate participants for the replacement of eligible agricultural commodities  or allowable expense items, are included as allowable income in both the program year margin and the reference margin (e.g. payments for inputs destroyed by fire).

Structural Change assessments are a routine part of the annual Program Year benefit calculation. If applied, structural change adjustments are intended to adjust historical production margins to reflect changes in a participant’s current farming operation. Typically, these adjustments result from a change in the size of the farm or the commodities being produced. In situations where productive units have not had a material change, structural change adjustments will not be applied.

As an example: Producer A normally seeds 1,000 acres but has decided to rent additional land and now seeds 2,000 acres. The income and expense structure on a 1,000 acre farm compared to a 2,000 acre farm is very different and Producer A’s historical margins would need to be adjusted to reflect this change.

A copy of your structural change calculation can be provided upon request by calling our Client Contact Centre.

For more information, please see TIC 6 Structural Change and Part 4 of the AgriStability Program Guidelines

When an AgriStability claim is completed, the participant will receive a Calculation of Program Benefits package. Participants should review the information in the package for accuracy. If an amendment is required, refer to the Revisions and Amendments section of this Handbook.

Other information about program benefits

Participants may be combined by AFSC to determine program benefits if it is determined that they are operating as a whole farm. Participants who are combined will have the benefit cap of $3,000,000 applied to the combined operation. Each participant will have their benefit determined by the per cent of the whole farm interest held at the end of the program year.

Beginning farmers with less than five years of tax and supplementary information will have their applied reference margin calculated using the three years immediately preceding the program year until such time that there are five years available to calculate an Olympic average reference margin.

If the applied reference margin is negative and more than one of the three selected years is negative, the participant’s claim will not be eligible for that program year.

Participants who did not participate in an AFSC administered AgriInsurance program at the minimum level (70 per cent coverage) for an insurable commodity, will have their negative decline benefit amount reduced by 70 per cent of the deemed production insurance benefit calculated for that commodity, based on information provided by AgriStability.

Interim benefit calculations give participants the option to receive an advance payment prior to the end of their program year in situations where they have suffered large income declines.

A participant may apply for an interim benefit upon completing six months of farming and up to 90 days after the completion of their program year.

To reduce the risk of overpayment, benefits are paid at 50 per cent of an estimated final benefit and benefits are limited to positive margin declines only; no payment of benefits on negative margins. Any interim benefits received will reduce final program benefits for that program year.

Participants who submit an interim application and receive benefits must submit a final application by the required deadlines. Failure to do so will result in a full overpayment of interim benefits.

For additional information about how to apply for an interim benefit, please refer to the Interim Application and Interim Guide.