The federal/provincial farmer account program AgriInvest is now in place for 2007, meaning $600 million in federal cash to kickstart those accounts will now be delivered.
Federal Agriculture Minister Gerry Ritz announced Thursday that agreements between Ottawa and the provinces are now in place to implement the new suite of business risk management programs, including AgriInvest, the margin-based AgriStability program, the production insurance program AgriInsurance and the disaster relief framework AgriRecovery.
Farmers taking part in AgriInvest may make deposits based on 1.5 per cent of allowable net sales (ANS) of eligible commodities, with funds matched by the government. For example, a farmer with ANS of $100,000 can deposit up to $1,500 and the federal/provincial contribution would match that.
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(ANS will equal sales of eligible commodities minus purchases of eligible commodities, allowing mixed farmers with supply-managed commodities to make deposits for their non-supply-managed sales. Eligible farmers’ ANS will be capped at $1.5 million per year, so the largest matching contribution would be $22,500.)
Farmers can then opt to withdraw their AgriInvest money to cover small margin declines or make investments that mitigate risks or improve market income. There won’t be a maximum account balance for 2007, but AgriInvest accounts for 2008 and beyond will be limited to 25 per cent of a farmer’s average ANS for the program year and the two previous program years, or for the average of years available.
AgriInvest is meant to replace the coverage for the top 15 per cent of margin decline, as was previously covered by the Canadian Ag Income Stabilization (CAIS) program. The difference compared to CAIS, according to Agriculture and Agri-Food Canada, is that farmers will be able to predict the annual government contributions to their AgriInvest accounts.
Kickstart
The “Kickstart” deposits to farmer accounts, meanwhile, will be based on 2.63 per cent of a farmer’s average ANS from previous years, depending on how new they are to farming. Average ANS for Kickstart would be capped at $3 million, limiting the maximum Kickstart payment to $78,900.
A further final Kickstart deposit may follow, if funds remain after the first deposits are complete. Farmers won’t have to make matching deposits to get the Kickstart cash.
Tax forms
AgriInvest will be delivered federally, held in accounts at participating banks and credit unions and harmonized with farmers’ tax forms in all provinces except Quebec, where La Financiere agricole will handle the funds and hold them in farmer accounts. For Quebec farmers and for corporations, AgriInvest applications will be harmonized with the AgriStability application.
In other provinces, farmers would get a notice indicating how much they may deposit in AgriInvest once they file their 2007 tax information in early 2008.
Each farmer’s AgriInvest account will contain two funds. Fund 1, the farmer’s deposits, will not be tax-deductible. Fund 2, the government contributions, would not be taxable until withdrawn, and would then be taxed as investment income.
