FEDERAL-PROVINCIAL-TERRITORIAL
FRAMEWORK AGREEMENT ON AGRICULTURAL AND AGRI-FOOD POLICY FOR THE TWENTY-FIRST CENTURY
PART TWO - CHAPTER COMPONENTS OF THE FRAMEWORK AGREEMENT
SECTION A - BUSINESS RISK MANAGEMENT
14 DEFINITIONS
14.1 In this Section:
"business interruption" means loss due to the destruction of productive assets, including income loss;
"business risk" means the potential for income loss due to unanticipated or uncontrollable perils;
"Crop Insurance program" means a crop insurance program as defined in section 2 of the federal Farm Income Protection Act;
"NISA program" means the net income stabilization account program as defined in section 2 of the federal Farm Income Protection Act; and
"production insurance program" includes a Crop Insurance program.
15 COMMON GOALS
15.1 The Parties agree to pursue the following common outcome goals:
15.1.1 to improve the tools available to producers for the purpose of managing business risk; and
15.1.2 to ensure that these tools are designed as incentives for producers to increase profitability through growth, diversification, value-added activity, and other means.
15.2 The Parties agree to pursue the following common management goal:
15.2.1 to develop a common risk management program base across Canada in which program eligibility and payment calculation provisions are jointly agreed to by governments, and are cost shared with producers on a federal-provincial-territorial basis.
16 TARGETS AND INDICATORS
16.1 The Parties agree to use the following principles for the design and evaluation of risk management programs:
16.1.1 minimizing countervail risk;
16.1.2 minimizing the distortion of farmers' production and marketing decisions;
16.1.3 focussing on the management of risks related to the stability of the entire farm entity and avoiding duplication of payments;
16.1.4 encouraging the use of risk management practices and the use and development of private sector risk management tools;
16.1.5 being relatively simple to administer and easily understandable;
16.1.6 minimizing the capitalization of program benefits;
16.1.7 contributing to profitability through innovation and value-added activity;
16.1.8 assisting in the management of risks related to environmental stewardship and food safety; and
16.1.9 facilitating long-term planning by farmers.
16.2 The Parties shall establish specific targets with respect to the principles set out in clause 16.1.
16.3 The Parties further agree to measure progress using the following indicators:
16.3.1 comparing farmers' aggregate sector margin to the five-year average in order to determine the extent to which farm incomes have been stabilized by risk management programs;
16.3.2 analysing commodity mixes in order to determine the extent to which profitability and competitiveness have been strengthened;
16.3.3 tracking the usage of private and public risk management tools and strategic planning practices by farmers in order to determine the extent to which whole-farm risks are being covered; and
16.3.4 analysing administrative procedures in order to monitor improvements in the administrative efficiency of risk management programs.
17 SUPPLY MANAGEMENT
17.1 For the purposes of supply-managed commodities, supply management constitutes a risk management tool.
18 IMPLEMENTATION MEASURES
18.1 To achieve the objectives and principles of of clauses 15 and 16, the Parties agree to work with stakeholders to use Existing Programs as a foundation for new risk management programming and agree to work with stakeholders towards making improvements that are necessary to expand the ability of these programs to provide for insurance coverage, income stabilization, disaster mitigation and support for investments.
18.2 The Parties agree to assess, each year, the degree to which risk management programs are achieving the goals set out in clause 18.1.
18.3 The Parties agree, in consultation with stakeholders, to develop improvements to production insurance programs that would provide farmers in all Provinces and Territories with more programming options to cover production losses for a wide range of agricultural products, including livestock, and that will include whole-farm and "basket of crops" benefit options.
18.4 The options under clause 18.3 shall ensure that actuarial calculations take into account the full range of activities that have an impact on a farmer's risk profile, ensure premiums reflect that accordingly, and enable a farmer's track record to be taken into account when new enterprises are undertaken by that farmer.
18.5 The Parties agree to develop a federal-provincial-territorial performance model on which these improved production insurance programs would be based, the purpose of which would be to:
18.5.1 strengthen, through the use of incentives, linkages between production insurance and the other elements of the Framework Agreement;
18.5.2 contribute to universality of access;
18.5.3 provide comprehensiveness of protection;
18.5.4 provide cost-effective and transparent program delivery; and
18.5.5 promote adherence to sound insurance and actuarial principles.
18.6 The Parties agree to develop, for the use of interested Provinces and Territories, shared capacity to improve program delivery efficiency.
18.7 The Parties agree, in consultation with stakeholders, to develop improvements to the NISA program that would:
18.7.1 expand its ability to provide for income stabilization and disaster mitigation;
18.7.2 provide a means for beginning farmers to make better use of the NISA program; and
18.7.3 provide support for investments made by farmers in activities that strengthen profitability.
18.8 After consulting with stakeholders, the Parties shall implement clause 18.7 by amending the existing agreements with respect to the NISA program. The amendments are to be executed, in a timely manner, so that the modified NISA program can be implemented by April 1, 2003.
18.9 After consulting with stakeholders, the Parties shall implement clause 18.3 by amending the existing agreements with respect to the Crop Insurance program. The amendments are to be executed, in a timely manner, so that the full range of production insurance options can be made available no later than the 2005 crop year.
18.10 The Parties agree to work with the private sector to develop, prior to April 2005, new risk management instruments and protocols to provide for business interruption coverage.
18.11 The Parties agree to develop and maintain an integrated database system for the delivery, by the Parties or their delivery agents, of business risk management programs and other related programs under the Framework Agreement. For that purpose, and for the purposes of audit, evaluation, design and analysis, the Parties agree to share all producer and administrative data required to deliver the programs, in a manner consistent with applicable privacy legislation.
18.12 The Parties agree that the Fall Cash Advance Program is a risk management program, and funding provided by Canada for that program shall count as funding for risk management programs for purposes of Part One of the Framework Agreement.
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| Date Modified: 2005-04-20 | Important Notices | |
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