Cooperative Plan
A cooperative plan is an agreement or an arrangement for marketing between producers and the Marketing Agency, that provides for:
- an initial payment to producers for delivery, as stipulated in the price guarantee agreement between the Minister of Agriculture and Agri-Food Canada and the Marketing Agency;
- pooling the proceeds from the sale of the agricultural product;
- equal returns to the producers for agricultural products of like grades, varieties and types; and
- returning to the producers the proceeds from the sale of all of the agricultural product that has been delivered under the agreement or arrangement and produced during the period specified in the agreement, after deducting the initial payment, the marketing agency's costs and any reserves.
The cooperative plan administered by the Marketing Agency must apply to a significant portion of the producers in the area where the plan applies or to a significant portion of the agricultural product produced in that area.
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Initial Payment
"Initial Payment" is the amount paid or credited to the producer for the agricultural product delivered to the Marketing Agency, to be marketed under one cooperative plan.
The initial payments made by the Marketing Agency improves the cash flow position of producers at the time of delivery and allows for better returns through the marketing of their crops over an extended season.
Marketing Agency's Cost
Marketing agency's costs are the actual direct costs incurred by the Marketing Agency related to the storing,
processing, carrying and selling of the agricultural products covered by the guarantee. The marketing agency's costs
are subject to a fixed maximum specified in the agreement.
At the time of making the application, the Marketing Agency is required to list all costs classifications expected
to be incurred for the coming crop year and, if applicable, the actual costs incurred for the past two years.
(Please refer to ‘Downloadables' section for a copy of Annex 1, Marketing Agency's Costs Form). Audited financial
statements for the last three years, if applicable, must also be provided with the application.
Examples of eligible costs are elevation, inspections, treating, interest, storage, transportation and administration
costs. Examples of costs that are not eligible are any fixed costs, bad debts and amortization.
Total Guarantee Breakdown
The price guarantee is determined by applying a risk factor to the expected average wholesale price of
an agricultural product for a given period. The determination of the level of the price guarantee is based on
the agricultural products and the grades to be sold.
The price guarantee is composed of two elements: the initial payment, which is paid to the producer
for agricultural products delivered to the pool; and the marketing agency's costs, which are incurred by
the marketing agency for the storing, carrying, processing and selling the agricultural product under a cooperative plan.
Both the initial payment and the marketing agency's costs are subject to a fixed maximum.
