Purebred beef producers face many risks, including fluctuations in market demand and the rising costs of feed and labour. Producing market-ready animals already requires significant investments of time, effort and money — and you need to take the right steps to offset these risks and ensure your operation continues to thrive in an uncertain marketplace.
The AgriStability program provides financial assistance to help producers weather financial losses. Let’s review what risks Canadian purebred beef producers are facing today and discuss how the AgriStability program can support your operation.
Challenges facing purebred producers
Purebred beef producers face unique challenges in today’s agriculture landscape, including:
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Fluctuations in demand — Your operation has made significant investments in genetics. While these genetics may be popular one year, demand may fall the next and cause your breeding stock and seedstock to lose significant value.
Rising costs — Your operation needs to pay for feed, fuel and labour to maintain the health of your herd. However, these costs are increasing and may put significant pressure on your bottom line. Marketing costs are also often higher for purebred operations.
Genetic investment risks — Your operation needs to invest in genetics to remain competitive. However, these investments may take years to produce returns.
Long production cycles — Purebred and seed-stock operations require years of investment to produce market-ready animals. One bad year can have a significant effect on the financial health of your operation.
Natural disasters — Natural disasters can have a significant effect on your operation. Droughts may increase your related feed costs and disease outbreaks can cause considerable losses among your calves and cattle.
How AgriStability can help
AgriStability is a margin-based insurance program that helps Canadian farmers and ranchers offset financial losses. The program assesses your financial data from the past five years to establish a historic baseline. If your profitability drops below this baseline due to circumstances outside of your control, such as increased costs or market fluctuations, it triggers a government payout of risk management funds.
These steps can help you make the most of the program:
Include all relevant information.
Ensure that the information you submit to the AgriStability program reflects all aspects of your operation. Many beef producers overlook submitting information about the seedstock side of the operation, which causes the historical margin to be undervalued. This means the payout that you receive from the AgriStability program does not truly reflect your financial losses. Each farm is unique, and the inclusion or exclusion of these items needs to be carefully considered based on the specific factors affecting each operation.
Submit accurate data.
It is crucial to ensure that the information you submit to the program reflects your operation’s unique financial situation. Maintain detailed financial records and use accurate valuation methods to update the value of your livestock and seedstock. This helps ensure that you receive the support you need after experiencing an income loss.
Get external support.
A third-party advisor can work with you to ensure that all aspects of your operation are included in your submission and help you meet the application deadlines for the program. They can assess the purchase and sale values of your animals and identify opportunities for payment — such as a decline in the value of your seedstock. This helps to increase the likelihood of a payment and helps to accurately reflect the risks that your operation is facing.
Take the next steps.
For more information, contact a member of MNP’s agriculture team. We have a range of experience regarding all aspects of agricultural business — from primary producers through to food and beverage processors. Visit our website at MNP.ca.
– Marvin Slingerland, CPA, CA, is the senior vice-president of agriculture and national leader of livestock services. Reach him at [email protected]. Kelleen Tait, CPA, CA, is the regional agriculture leader in Edmonton. Contact her at [email protected].
