CAIS Program: Fact Sheet

Supply Management

The Canadian Agricultural Income Stabilization (CAIS) program integrates stabilization and disaster coverage into one program.

Under former programs, supply-managed commodities were:

• eligible for disaster coverage under the Canadian Farm Income Program (CFIP)
• ineligible for stabilization coverage under the Net Income Stabilization Account Program (NISA).

The CAIS program replaces CFIP and NISA, and provides similar coverage for
income from supply-managed commodities.

Under CAIS, if a producer’s current year margin decline is less than or equal to 30 per cent, staying within Tiers 1 and 2, the producer and government contributions are adjusted to stabilize income only from commodities that are not supply-managed. This is necessary to account for the income stabilization already provided to supply managed commodities through the quota system.

If a producer’s current year margin decline exceeds 30 per cent, falling into Tier 3, no adjustment is required and the full payment is issued.

Adjusting payments for supply managed income

In the case of a margin decline that does not fall into Tier 3, the government payment is adjusted by removing the portion related to supply-managed commodities. This is done by:

• calculating total allowable farm income used in the years used to determine the reference period,
  
  
• calculating total allowable farm revenue from supply managed commodities used in the years to determine the reference period,
  
  
• determining the percentage of allowable farm revenue from supply-managed commodities in the reference period, and
  
  
• reducing the calculated government and producer contributions by this percentage

Example 1:

In this example, the producer has a reference margin of $250,000 based on an Olympic average of the 1999, 2001 and 2002 years. The producer‘s program year margin drops by $50,000 or 20 per cent from the reference margin, so the margin decline remains in Tier 2. This means the payment is adjusted to remove supply-managed income. The chart below shows the producer’s total allowable farm revenue and allowable farm revenue from supply -managed commodities sales, over five years.

The percentage of allowable farm revenue from supply-managed commodities during those years is calculated using these figures.

Allowable Farm Income From Supply Managed Commodities = 380,000 / 760,000 = 50%.

The final government contribution will be reduced by this percentage.

Program Calculation

The producer’s program year margin has declined by $50,000 or 20 per cent from his reference margin.

The producer selected maximum protection. With a 20 per cent decline, five per cent (1/4 of the 20 per cent) or $12,500 in total, falls within Tier 2. In this tier, the payment is split 30/70 between the producer and government. Therefore, in Tier 2, the producer receives $3,750 from their account and a contribution of $8,750 from governments.

The remaining 15 per cent or $37,500 falls within Tier 1. In Tier 1, the cost-sharing is 50-50. This works out to $18,750 apiece from the account and from governments.

The total calculation is $22,500 from the producer's account and $27,500 from governments.

Calculated payment

The calculation adds up to $50,000, however an adjustment to remove the portion related to supply-managed commodities must be made.

Remember, in this example the allowable farm revenue from supply-managed commodities account for 50% of the producer's total allowable farm revenue. Because the producer's decline does not go beyond 30%, the government and producer's contributions are reduced by 50%.
(see 'Adjusting payments for supply managed income' above)

Adjusted governments’ contribution $27,500 * .50 = $13,750
Adjusted producer contribution $22,500 * .50 = $11,250

Total Payment = $25,000

Example 2:

In this example, the same producer experiences a more significant loss. The producer's program year margin drops by $125,000 or 50 per cent from the reference margin, so the margin decline falls into Tier 3. In this case, no adjustment is made for supply-managed income.

Program Calculation

The producer selected maximum protection. With a 50 per cent decline, 20 per cent, or $50,000 in total, falls within Tier 3. In this tier, the payment is split 20/80 between the producer and government. Therefore, in Tier 3, the producer receives $10,000 from their account and a contribution of $40,000 from governments.

Fifteen per cent, or $37,500 in total, falls within Tier 2, where the payment is split 30/70 between the producer and government. Therefore, in Tier 2, the producer receives $11,250 from their account and a contribution of $26,250 from governments.

The remaining 15 per cent, or $37,500, falls within Tier 1. In Tier 1, the cost- sharing is 50-50. This works out to $18,750 apiece from the producer's account and from governments.

The total calculation is $40,000 from the producer's account and $85,000 from governments.

Calculated payment

Since the producer's total margin decline is greater than 30 per cent, no adjustment is required for supply-managed income and the full payment is issued.

Total Payment = $125,000

For more information on the CAIS Program:

• In British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, and Newfoundland and Labrador, and Yukon call (toll free) at 1-866-367-8506 or visit our Web site at www.agr.gc.ca/caisprogram
  
  
• In Alberta, call Agriculture Financial Services Corporation (AFSC) (toll free) at
  1- 877-744-7900 or visit www.AFSC.ca.
  
  
• In Ontario, call the Agricorp (toll free) at 1-877-838-5144 or visit www.gov.on.ca/OMAFRA
  
  
• In Quebec, call la Financière agricole du Québec (toll free) at 1-800-749-3646 or visit www.financiereagricole.qc.ca
  
  
• In Prince Edward Island, call 1-902-368-4842 or visit www.gov.pe.ca/go/cais