Canadian Agricultural Income Stabilization (CAIS) Program

Updated: June 23, 2004

CAIS 2003
Technical Information Circular #3

STRUCTURAL CHANGE

3.1 Structural Change

Structural change is a change in ownership, business structure, size of operation, farming practices, type of farming activity, method of accounting, moving from one province to another, or any other practice that a participant might undertake that may alter production margins. If the Administration determines that there has been a significant change in a farming operation’s productive capacity as a result of a structural change, adjustments will be made to the reference year margins to reflect the change.

3.2 Productive Capacity

3.2.1 Acreage
Productive acres include those already producing a crop, or intended for seeding a crop which would be productive in its first year. A crop which cannot normally be harvested in its first year, or in the program year, will not be deemed as contributing to the productive capacity of the farm.

3.2.2 Breeding Operations
The productive capacity of a breeding operation will be determined by the number of breeding females which have birthed. Breeding animals which have been purchased, but have not birthed will not be deemed as contributing to the productive capacity of the farm.

3.2.3 Feeder Operations
The productive capacity of purchased livestock operations (feeder operations) will be determined by the number of sales in the fiscal year. Feeder animals which have not been sold, will not be deemed as contributing to the productive capacity of the farm.

The productive capacity of Custom feedlot operations will be based on the number of animal feed days.

NOTE: All information provided by applicants is subject to verification and acceptance by the CAIS Administration.

3.3 Benchmark per Unit (BPU) Margins

A benchmark per unit (BPU) margin is the margin calculated from commodity specific economic data for a particular region. BPU margins represent the on-average return per unit of productive capacity for a commodity, after factoring in all the allowable income and expenses associated with producing that commodity. BPU margins are used for purposes of calculating the adjustment to the applicant’s actual reference margins when there has been a structural change.

3.4 Structural Change Adjustment

The structural change adjustment will be performed as follows:

1. For each year in the reference period, the difference between the number of productive units (for each commodity or commodity group) in the Program Year and the number of units in the Reference Year will be calculated.
2. The difference in productive units for each commodity will be converted to a dollar amount by multiplying the difference in units by the benchmark per unit margin in that reference year for that commodity or commodity group.
3. This dollar amount will be added (subtracted) to the unadjusted production margin for that reference year.
4. Structural Change adjustments will be applied where the average unadjusted reference margin and the average adjusted reference margin differs by more than 5% and $1,000.

Note: Where the standard structural change adjustment cannot be calculated, or if in the opinion of the Administration, the standard structural change adjustment does not accurately reflect the structural change of the farming operation, alternate methods of calculating structural changes may be applied by the Administration.

The Administration will apply any structural change adjustments to the production margin of each reference year prior to calculating the Olympic Average Reference Margin but after any Whole Farm adjustments.

3.5 Structural Change and Disaster Circumstances

The structural change adjustment may be waived if, in the opinion of the Administration, a structural change was a result of disaster circumstances. These situations will be dealt with on a case-by-case basis to ensure that all relevant factors affecting production in the Program Year are considered. Moreover, the structural change may be waived if productive capacity cannot be restored, or until such time that it is reasonable to restore productive capacity. When assessing structural changes resulting from disaster circumstances, the following principles will be applied by the CAIS Administration;

• Disaster circumstances include only those occurring for reasons outside of a producer’s control. Common examples are flooded land and depopulation of livestock due to disease. Disaster circumstances do not include circumstances arising from a participant’s health or business decisions.
• Where compensation is received by the producer for lost productive capacity, it will be considered allowable income under the program to the extent it is received in lieu of normal farm income or as an allowed program payment.
• Where the nature of the disaster is such that the producer’s productive capacity can be restored, the structural change will be waived for such time as is reasonable for restoration to take place.
• Where the nature of the disaster is such that the producer’s productive capacity cannot be restored, or restoration would be economically unfeasible, the structural change will be waived for such time as is reasonable for the producer to develop alternative capacity. Generally speaking, a reasonable time period would not exceed one year.
  

The CAIS program is delivered in British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Newfoundland and Labrador and Yukon by the federal government. The information on this website refers to deadlines and other delivery details for these provinces only.

If you are in Alberta, Ontario, Quebec, or Prince Edward Island, the CAIS program is delivered provincially. Please click on your respective province to be linked to the provincial administration.

Date Modified: 2004-06-23		Important Notices
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