Price Pooling Program (PPP)

The Price Pooling Program (PPP) is a risk management program designed to assist cooperative marketing of eligible agricultural products, including processed products.

The program provides support for access to credit to allow for initial payments to producers for products delivered to the pool. It also provides a price guarantee that protects the marketing agencies and its producers against unanticipated declines in the market price of their products. The guarantee also covers eligible costs incurred by the agency for products sold under a cooperative plan. The program is administered by eligible marketing agencies.

Eligibility Criteria

Canadian marketing agencies operating under a cooperative plan.

To qualify, the marketing agency must meet the definition defined in the Act and market the agricultural product or value-added product under a cooperative plan. Under this plan, the revenues derived from the sales of the agricultural product are pooled and the producers receive equal returns for products of like grade, variety and type.

Summary

How does it work?

The Minister of Agriculture and Agri-Food Canada (AAFC) enters into an agreement with a marketing agency (associations of producers, processor, or selling agent) for the marketing of agricultural products under a cooperative plan. The agreement provides for a price guarantee for products sold, allows the marketing agency to make an initial payment to the producers for products delivered and covers eligible storing, processing, carrying and selling costs of the marketing agency, to a fixed maximum. The price guarantee is set at a percentage of the expected average wholesale price of the product.

The agreement covers the production of an agricultural product for a crop year. Once all the agricultural product is sold out, the actual average wholesale price received by the marketing agency is determined. If the calculated value is less than the eligible initial payment plus the eligible costs, the program allows for a payment for the shortfall by the federal government.

If the calculated value is greater, by contrast, the surplus is retained by the pool for future use or is distributed by the marketing agency to the producers according to the grade, variety and type of the product that they delivered to the pool.

Program benefits include:

• Improves the potential for higher returns through the provisions of an initial payment for the product delivered, allowing them to meet their short-term financial obligations, and through better returns for the product resulting from the more professional marketing approach possible in a cooperative marketing situation;
• provides equal returns to producers for products of like grade, variety and type;
• encourages producers in forming their own marketing agency to take advantage of marketing opportunities;
• helps process products to increase returns (value-added production) and establish a market for producers' production;
• improves the producers' farm income by allowing the marketing of their crops over an extended season when market conditions are better thus achieving orderly marketing of these products;
• helps the marketing agencies lock-in a minimum rate-of-return for their members and protects them from unexpected declines in the marketplace;
• assists marketing agencies in obtaining financing for operating funds and for issuing members an initial payment for their product upon delivery to the cooperative.

Ontario Contact(s):
See National Contact.