Canadian Agricultural Income Stabilization (CAIS) Program: Program Payments

With the Canadian Agricultural Income Stabilization (CAIS) program, you share the cost of stabilizing your farm income with both levels of government. The program is based on comparing your margin for the current year to a reference margin, which is an average of previous years' margins. A margin is allowable income minus allowable expenses.

To participate in the program, you select the level of protection you want for your operation. You must also open a CAIS account at a participating bank, credit union or other financial institution and make the necessary deposit to secure that level of protection.

If your income drops below your reference margin, you will receive a program payment, which includes money from your account and government contributions. The government contribution portion of your CAIS benefit increases as your loss deepens. Government funds are paid out based on the funds which you have on account and the size of the loss experienced. This is how program payments are made:

Tier 3
As funds are paid out from your CAIS account to cover the portion of your program year margin decline that falls within Tier 3 (the disaster tier), you will receive government contributions at a 20:80 or $1:$4 producer/government ratio. You will receive government contributions at this rate until the combined amount of your own funds plus government contributions, restores 70 per cent of your reference margin.

Tier 2
If you still have funds available in your CAIS account after covering any margin declines that fall within Tier 3, you will be paid these funds and receive government contributions to cover the portions of your margin decline that fall within Tier 2. As your funds are triggered, you will receive government contributions at a 30:70 or $1:$2.33 producer/ government ratio, until the combined amount of your own funds plus government contributions, restores 85 per cent of your reference margin or up to your selected protection level.

Tier 1
If after covering any margin declines that fall within Tier 2 and 3, you still have funds available in your CAIS account you will be paid these funds and receive government contributions to cover the portions of your margin decline that fall within Tier 1. As your funds are paid, you will receive government contributions at a 50:50 or $1:$1 producer/ government ratio. You will receive government contributions at this rate until the combined amount of your own funds plus government contributions, restores up to *92 per cent of your reference margin or up to your selected protection level.

*This percentage is subject to government limitations on payments. The government portion of your payment can total up to 70% of your total loss.

Sample Payment Calculation
In this example, the participant, who had a reference margin of $100,000, selected an 80 per cent protection level against a full margin decline, and deposited $17,000.

This producer’s $17,000 deposit was able to leverage a maximum of $44,000 in government contributions for a total payment of $61,000. Of a total margin decline of $65,000, 94 per cent was addressed through the program.

*(Using Olympic average, lowest year is dropped from the calculation.)
**(Using Olympic average, highest year is dropped from the calculation.)

Step 2: Select Protection Level

Protection Level (against full decline)	Producer Deposit or Account Balance Required
92% (maximum)	$22,000
90%	$21,000
85%	$18,500
80% SELECTED	$17,000 PRODUCER DEPOSIT
75%	$15,500
70% (minimum)	$14,000

Step 3: Calculate the Program Year Margin

Tax Year	Allowable Income	Allowable Expenses	Production Margin
2005	130,000	90,000	40000
Net change in purchased inputs +			$1,000
Net change in accounts receivable +			($6,000)
Net change in accounts payable +			$4,500
Net change in crop inventory +			($1,000)
Net change in livestock inventory +			($3,500)
= Program Year Margin			$35,000

Step 4: Calculate Payment

Margin Decline
	Reference Margin:	$100,000
Less	Program Year Margin:	$35,000
	Total Decline	$65,000

Government funds leveraged by Account Balance of $17,000 (see Step 2 above):

Tier (Prod/Gov ratio)	Portion of $65,000 Decline	Producer Funds	Government Funds	Total Payment
Tier 3 (20/80) ($1/$4)	$70,000 - $35,000 ($35,000)	$7,000	$28,000	$35,000
Tier 2 (30/70) ($1/$2.33)	$85,000 - $70,000 ($15,000)	$4,500	$10,500	$15,000
Tier 1 (50/50) ($1/$1)	$100,000 - $85,000 ($15,000)	$5,500	$5,500	$11,000
Totals:		$17,000	$44,000	$61,000

Adjusted Account Balance Requirements
Your initial CAIS account balance requirements are based on the
estimated reference margin that appears on the Options Notice that you
receive prior to the start of your program year. After your CAIS
application has been processed, The CAIS Administration may adjust
your reference margin to account for:

Your account balance will determine the level of protection you have secured and the amount of government contributions and funds from your CAIS account you will receive.

The CAIS Administration will let you know that you are receiving a payment, through a Calculation of Benefits Notice. A Withdrawal Notice will also be sent to your financial institution authorizing them to pay out the funds that have been triggered from your CAIS account. At the same time, a payment for the amount of government contributions will be sent directly to you from the administration.

The maximum you can receive from governments under the CAIS program is capped, or limited to, either $3 million or 70 per cent of your margin decline, whichever is lower.

Supply managed commodities are eligible for disaster protection under the
CAIS program. For more information, see the Supply Management fact sheet.

You may make unmatched withdrawals at any time from your account,
provided that you have enough funds in your account to cover the protection
level which you have chosen for the current program year. To request an
unmatched withdrawal, contact the CAIS program Administration.

The CAIS program Administration may require you to make mandatory
withdrawals from your CAIS account for reasons including (but not limited to):

Note: Funds in your CAIS account above and beyond the account balance required for your protection level will not draw government contributions.

The Canadian Agricultural Income Stabilization Program: Program Payments

The Canadian Agricultural Income Stabilization Program:
Program Payments