Vol. 150, No. 3 — February 10, 2016
SOR/2016-7 January 29, 2016
AGRICULTURAL MARKETING PROGRAMS ACT
Regulations Amending the Agricultural Marketing Programs Regulations
P.C. 2016-34 January 29, 2016
His Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food, pursuant to subsection 4.1(3) (see footnote a) and section 40 (see footnote b) of the Agricultural Marketing Programs Act (see footnote c), makes the annexed Regulations Amending the Agricultural Marketing Programs Regulations.
Regulations Amending the Agricultural Marketing Programs Regulations
1 Section 1 of the Agricultural Marketing Programs Regulations (see footnote 1) is replaced by the following:
1 The following definitions apply in these Regulations.
Act means the Agricultural Marketing Programs Act. (Loi)
financial institution has the same meaning as in section 2 of the Bank Act. (institution financière)
Presumption — Related Producers
1.01 (1) For the purposes of paragraph 3(2)(e) of the Act, a producer is presumed to be related to another producer in any of the following circumstances:
- (a) one of the producers is the spouse or common-law partner of the other producer;
- (b) one of the producers owns at least 25% of the voting shares of the other producer;
- (c) one of the producers owns at least 25% of the voting shares of a corporation that directly or through any other corporation owns 25% of the voting shares of the other producer; and
- (d) one of the producers is entitled to 25% or more of the profits or revenues of the other producer.
(2) For the purposes of paragraph (1)(a), common-law partner means an individual who has been cohabiting with a producer in a conjugal relationship for a period of at least one year.
2 The Regulations are amended by adding the following after section 1.2:
1.3 For the purposes of the definition livestock in subsection 2(1) of the Act, rabbit, red deer, boar, goat and elk are designated as livestock.
1.4 Cervid antler velvet and bees are designated as agricultural products that are subject to Part I of the Act.
1.5 The following classes of breeding animals are designated as being subject to Part I of the Act:
- (a) cattle, goats and sheep, if they are intended to be sold during the production period for which the advance is made; and
- (b) hogs that are
- (i) less than 12 months old, if they are intended to be sold for breeding purposes during the production period for which the advance is made, or
- (ii) more than 10 months old, if they are intended to be sold for purposes other than for breeding during the production period for which the advance is made.
3 The heading before section 3 and sections 3 and 4 of the Regulations are replaced by the following:
3 (1) For the purposes of paragraph 19(1)(c) of the Act, the administrator’s percentage is 3% if they have not completed at least one program year.
(2) For the purposes of paragraph 19(1)(c) of the Act, the administrator’s percentage shall be calculated using the five most recently completed program years, or if an administrator has completed at least one program year but less than five program years, using all of the completed program years, in accordance with the following formula:
(A / B) × 100
- A is the sum of the total of the outstanding principal balances of producers who are in default in each of those program years calculated 10 months after the completion of each program year; and
- B is the sum of the total principal amount advanced in each of those program years.
(3) For the purposes of element A, calculation of the outstanding principal balances shall exclude amounts owed by a deceased producer who is in default or by a producer who is in default and who has been deemed legally incapable of making decisions.
4 The heading before section 5 and section 5 of the Regulations are replaced by the following:
Attributable Percentages for Related Producers
5 (1) For the purposes of subsections 9(2) and 20(2) of the Act, the amounts received by, or attributed to, related producers are attributable in the following manner:
- (a) if both producers are individuals, each producer is attributed 100%;
- (b) if one producer is an individual and the other producer is a partnership, the individual is attributed the percentage of their direct or indirect entitlement to the profits of the partnership;
- (c) if one producer is an individual and the other producer is a corporation, the individual is attributed the percentage of the voting shares that the individual owns, holds or controls directly or indirectly in the corporation;
- (d) if one producer is an individual and the other is a cooperative, the individual is attributed the percentage of their direct or indirect entitlement to the revenue or profits of the cooperative;
- (e) in the case of two producers that are not individuals and that are related under paragraph 3(2)(d) of the Act, each producer is attributed 100%;
- (f) in the case of two producers that are related due to circumstances other than those set out in paragraph 3(2)(d) of the Act, if one producer is a corporation and the other producer is not an individual, the other producer is attributed the percentage of voting shares that it owns, holds or controls directly or indirectly in the corporation; and
- (g) in the case of two producers that are related due to circumstances other than those set out in paragraph 3(2)(d) of the Act, if one producer is a cooperative or partnership and the other producer is not an individual, the other producer is attributed the percentage of their direct or indirect entitlement to the profits or revenues of the cooperative or partnership.
(2) For the purposes of this section, a producer is not to be attributed the same advance more than once either directly or indirectly.
(3) If a producer is a partnership, corporation or cooperative, that producer is not to be attributed any amount received by a related producer that is an individual.
5 Paragraph 6(b) of the Regulations is replaced by the following:
- (b) $10,000.
6 Paragraph 6.1(2)(b) of the Regulations is replaced by the following:
- (b) $10,000.
7 Section 6.2 of the Regulations is replaced by the following:
6.2 (1) For the purposes of section 12 of the Act, until the advance is repaid in full, the required security on the agricultural product for which the advance was made and on any agricultural product produced in a subsequent production period by the producer is one or both of the following:
- (a) security on the agricultural product under applicable provincial law; and
- (b) security referred to in section 427 of the Bank Act on the agricultural product.
(2) For the purposes of section 12 of the Act, until the advance is repaid in full, the required security in the case of an agricultural product that is not yet produced or in the case of livestock is, in addition to the security set out in subsection (1), one or a combination of the following:
- (a) a full or partial assignment of any amount that may be received by the producer under a program listed in the schedule to the Act;
- (b) insurance or other financial programs or products that, in the opinion of the Minister, protect against one or more risks that are associated with the issuance of an advance;
- (c) financial collateral that is assignable by the producer; and
- (d) a letter of guarantee from the producer’s financial institution guaranteeing the advance.
6.3 For the purposes of subparagraphs 10(1)(c)(ii) and (d)(ii) of the Act, a guarantor is
- (a) an individual or group of individuals that has the financial collateral to issue a letter that guarantees an advance until it is fully reimbursed; or
- (b) a financial institution that issues a letter that guarantees an advance until it is fully reimbursed.
8 (1) Paragraph 7(1)(a) of the Regulations is replaced by the following:
- (a) the Minister receives a request in writing from the administrator for payment that includes documentation that supports the amount claimed and any documentation needed by the Minister to support an action under subsection 23(2) of the Act;
(2) Subparagraph 7(1)(b)(ii) of the Regulations is replaced by the following:
- (ii) after receiving notice that the producer is seeking a stay of proceedings, or other form of protection from their creditors, or that the producer is subject to a receiving order, files with the appropriate authority a notice of their claim against the assets of the producer and provides a copy of that notice to the Minister,
(3) Clauses 7(1)(b)(v)(A) to (C) of the Regulations are replaced by the following:
(A) a copy of one letter of request for payment that has been sent to the producer,
(B) a declaration that the administrator made or attempted to make a personal visit or telephone call to the producer, and
(C) a detailed description of any attempts at mediation or other methods used to negotiate the terms for repayment; and
(4) Paragraph 7(1)(c) of the Regulations is replaced by the following:
- (c) the administrator provides to the Minister an undertaking in writing to advise the Minister of all opportunities for collection as they arise.
(5) Subsection 7(1.1) of the Regulations is repealed.
(6) Paragraph 7(2)(a) of the Regulations is replaced by the following:
- (a) the administrator has not made a request in writing to the Minister for payment within 10 months after the end of the program year;
(7) Paragraph 7(2)(d) of the Regulations is amended by striking out “and” after subparagraph (ii) and by replacing subparagraph (iii) with the following:
- (iii) specifying the name and address of all of the producers that are in default in the program year,
- (iv) providing the principal and interest owed by the administrator to the lender at the time the request was sent with respect to the producers that are in default, and
- (v) providing a detailed calculation of how the lender determined the principal and interest owing.
9 The heading before section 8 and section 8 of the Regulations are replaced by the following:
8 (1) If a producer that is an individual dies, no penalty for failing to provide a proof of sale for an agricultural product will be imposed under the repayment agreement if a repayment of an advance is made on behalf of that producer.
(2) If a producer that is an individual is declared legally incapable of making decisions, no penalty for failing to provide a proof of sale for an agricultural product will be imposed under the repayment agreement if a repayment of an advance is made on behalf of that producer.
(3) A producer may make a repayment of an advance with the proceeds from the security that they provided to secure the repayment of the advance and will not be penalized under the repayment agreement for failing to provide proof of sale for an agricultural product.
(4) With respect to an advance received for agricultural products under a repayment agreement, a producer may use a proof of sale for any of those agricultural products when making a repayment.
Stays of Default
9 For the purposes of subsection 21(2) of the Act, the Minister may order a default to be stayed within a period of four months before a default is impending.
Coming into Force
10 These Regulations come into force on the day on which subsection 127(2) of the Agricultural Growth Act, chapter 2 of the Statutes of Canada, 2015, comes into force, but if they are registered after that day, they come into force on the day on which they are registered.
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the Regulations.)
Agriculture and Agri-Food Canada (AAFC) is required to complete a periodic legislative review of all programs governed by the Agricultural Marketing Programs Act (AMPA). One of the programs governed by the AMPA is the Advance Payments Program (APP).
In the fall of 2010, a review of the AMPA concluded that the APP was well liked by all stakeholders and the program continued to be a relevant and important tool for agricultural producers. However, stakeholders agreed that some improvements to the APP were necessary to reduce administrative complexity and make the program more accessible for producers.
As a result of this review, legislative improvements were made to the AMPA through the Agricultural Growth Act (AGA), which received royal assent on February 25, 2015. Roughly half of all the legislative improvements came into force on February 27, 2015; however, the remaining improvements require amendments to the Agricultural Marketing Program Regulations before they can be brought into force.
The Advance Payments Program is a federal financial loan guarantee program, which allows agricultural producers to obtain cash advances based on the estimated market value of their agricultural commodities either in the course of being produced or in storage. Cash advances are used by producers to improve their operation’s cash flow giving them the necessary financial flexibility to sell their products when market conditions are most favourable. A producer can receive up to a total of $400,000 in cash advances, with the Government of Canada paying the interest on the first $100,000 for each program year.
There are four groups of stakeholders involved in the delivery and implementation of the APP. The first group of stakeholders are the producers who apply to the program and receive cash advances on their eligible commodities. These regulatory changes will broaden producer access to the program and make it easier for them to understand and comply with program rules.
The second group of stakeholders are the third-party administrators (approximately 43 producer organizations and one provincial government agency), which deliver the APP to producers. These regulatory changes will streamline the administrative process and ease reporting requirements.
The third group of stakeholders are the financial institutions (e.g. chartered banks, credit unions) that provide the financing used by third-party administrators to fund all cash advances issued to producers under the APP. These regulatory changes will not impact financial institutions.
The fourth and final stakeholder is the Government of Canada, which subsidizes interest costs and guarantees the repayment of advances to the financial institutions.
The objective of these amendments is to ensure that the Agricultural Marketing Programs Regulations, which govern the APP, are reflective of the feedback received during the legislative and program reviews and are consistent with the changes made to the AMPA via the AGA.
Specifically, these proposed regulatory changes
- broaden program access;
- provide added program flexibility; and
- improve and streamline administration and delivery of the APP.
The majority of these regulatory amendments are necessary due to the changes made to the AMPA via the AGA. The following describes the regulatory amendments required to achieve each of the objectives as stated above.
These regulatory amendments allow for the limited expansion of the types of agricultural products eligible under the APP, such as elk antler velvet and bees. Further, the AGA has allowed for the designation, through regulation, of certain classes of breeding stock which are otherwise specified as ineligible. The regulatory amendments specify that additional livestock categories, such as hogs, sheep, goats, and cattle raised for sale as breeding stock, are eligible for APP advances.
Currently, the AMPA limits a producer’s APP cash advance to the dollar value of his/her coverage under Business Risk Management (BRM) programs (AgriInsurance and AgriStability). To further broaden producer access to the APP, the regulatory amendments make additional classes of security allowable, including the assignment of cash investments and other insurance and risk management products that cover similar risks to the current BRM programs listed in the schedule of the AMPA. This change enables producers who cannot receive the full eligible advance, because of limits in their BRM program coverage, to pledge additional or alternative securities in order to receive maximum advance amounts under the program.
In addition, the regulatory amendments allow for third parties (e.g. financial institutions or individuals) to act as loan guarantors, which will facilitate program access for groups such as cooperatives and corporations with numerous shareholders, who will no longer be required to have all shareholders provide personal guarantees in order to access advances under the program.
Advance repayment requirements have been made more flexible under the amended Regulations. For example, repayments without penalty, when the producer repays the advance with proceeds from a security instead of the sale of the agricultural product associated with the advance, are now allowed under certain circumstances. This change was made in order to avoid putting a producer’s advance unnecessarily into default, which would then initiate additional processes which are time consuming and costly for both the producer and third-party administrator.
Allowable overpayment limits for producers have been increased from $6,000 to $10,000, thus reducing penalties to producers who find themselves in an overpayment situation. For example, where a producer experiences a crop failure that is too small to receive a production insurance payment, but large enough to reduce the amount that they are eligible for under the program, they are now allowed a shortfall of up to $10,000 before being subject to an interest penalty for the overpayment.
Streamline program delivery
The regulatory changes provide increased consistency in how the APP is delivered amongst all third-party administrators.
These changes improve the consistency of how
- producer penalties are applied;
- cash advance maximums are determined;
- third-party administrator liabilities are calculated; and
- defaults are managed.
Specifically, producer limits pertaining to receiving an advance which exceeds the eligible amount (an overpayment, as mentioned above) and for repayments made without appropriate documentation of the sale of the agricultural product have been harmonized and expanded. The increased limits mean that penalties will not be applied unless the new, higher limit is surpassed. Furthermore, the fact that both limits are now the same makes it easier for administrators and producers to remember the rules for both situations.
The regulatory changes better define the rules concerning how the amount of an eligible cash advance is determined and how cash advances are attributed among related producers (e.g. a corporation and its shareholders) for the purpose of enforcing the program limits (i.e. a maximum cash advance of $400,000, on which the Government pays the interest on the first $100,000). This adds clarity for third-party administrators and will increase access to advances for eligible producers.
Third-party administrators are held accountable for their APP loan risks, in part, through an administrator’s percentage. Administrators with high loan defaults have a higher administrator’s percentage, which will limit their lending capacities to producers. The regulatory amendments change how the administrator’s percentage is measured by calculating it over five years rather than two years, thereby simplifying the method of calculation. This makes the administrator’s percentage less volatile to change from one year to the next and makes it easier for administrators to understand how their program history affects their capacity to issue advances in any given year.
The rules associated with third-party administrators requesting a stay of default have not been predictable or consistent. The amended Regulations establish a particular timeframe within which a stay of default may be requested to improve predictability and consistency amongst third-party administrators and producers. As well, the amendments simplify the process and clarify the requirements for third-party administrators to manage advance defaults and for the Government to make payments under the guarantee.
The “One-for-One” Rule does not apply, as the amendments will not result in direct administrative costs or savings for businesses. Changes in administrative burden resulting from these regulatory amendments are only expected to impact the third-party administrators. Third-party administrators, for the purpose of the “One-for-One” Rule, are not considered businesses, as they are administering the APP on behalf of AAFC, are not engaging in commercial activity, and are intended to operate on a cost-recovery basis only.
Small business lens
The small business lens does not apply, as these amendments do not impose any additional administrative or compliance costs on small businesses.
The main conclusions from the legislative review that are addressed through regulatory changes (and where required, concomitant legislative changes) were the following: APP eligibility should be broadened, rigid programming processes should be made more flexible, and APP administration should be streamlined. The recommendations from the legislative review resulted in these regulatory amendments.
Stakeholders were consulted throughout the legislative review of the AMPA, which identified the need for these regulatory amendments. The legislative review consisted of three components:
- A third-party evaluation which assessed the relevance, impact, and performance of the APP from 2006 to 2011.
- A review of program operations led by AAFC. This activity included a review of current operations and delivery of the APP to identify any potential improvements from a program delivery efficiency perspective.
- A review of administrative efficiency led by the Office of Audit and Evaluation of AAFC. This component focused on evaluating the administrative functions of AAFC to see if resources allocated for the operations of the APP were efficiently used.
The sources of information used to complete the above activities included:
- Review of data from AAFC’s APP electronic delivery system: The data consists of program activity information, such as producer details, advances and repayments.
- Review of Farm Financial Survey (FFS) data: The data is based on producers who were primarily involved in the production of the agricultural products that were eligible for the APP, together with 2009 data for all APP users and non-users.
- Individual interviews with key informants: The third-party evaluation completed various in-depth individual interviews with program officials, program administrators, and representations from participating financial institutions.
- External stakeholder engagement meetings: AAFC organized and hosted nine stakeholder (financial institutions, producer organizations and producers) engagement meetings across Canada to gather information on the relevancy, performance, design and delivery of the APP and Price Pooling Program.
- Producer questionnaires: Over 3 000 producers who participated in the APP in 2008 were invited to complete a mailed questionnaire. They had the option of completing the survey by mail or online. A total of 743 producers completed the survey.
- Producer case studies: Two case studies were conducted by the third-party evaluators with producers who participated in the APP. The producers who took part in the case studies completed a written questionnaire and participated in a telephone interview.
Prepublication in the Canada Gazette
The proposed amendments to the Agricultural Marketing Programs Regulations were prepublished in the Canada Gazette, Part I, on July 11, 2015, and were open for comments for a 30-day period. Third-party administrators, financial institutions, and farm organizations were all invited to discuss the proposed regulatory amendments and all groups were encouraged to provide their comments on the proposed amendments within the 30-day consultation period.
Through the consultation period, AAFC held seven separate stakeholder meetings in the cities of Guelph, Montréal, Ottawa and Winnipeg. For those stakeholders who could not attend these meetings in person, AAFC also provided teleconference numbers. Each of the meetings was provided in a bilingual environment and all stakeholders could express their concerns in the official language of their choice. In addition to the feedback received through these meetings, AAFC received written comments from 11 different stakeholders.
A majority of the comments were seeking clarification or guidance on program implementation or program policy (e.g. what product category does Christmas trees belong, how does a program administrator determine common-law relationships) and will be addressed as needed through separate processes (e.g. discussion with program administrators, clarification in the Advance Payments Program Guidelines, policy bulletins).
In total, stakeholders provided seven comments affecting six sections of the prepublished Regulations. After careful review of all comments, AAFC agreed to implement changes that reflect five of the seven comments, which affect four of the six sections in the prepublished Regulations. The two comments, which were not implemented, were in regard to grammatical changes to paragraph 1.01(d) and subparagraph 7(2)(d)(iii). Upon further consideration of the requested changes with Justice Canada, it was decided that the wording in the prepublished Regulations was correct, consistent with the intention of the amendments and, as a result, did not require further adjustments.
Agriculture and Agri-Food Canada will engage stakeholders who had written or emailed comments during the 30-day consultation period. The intention of this engagement is to follow up on the comments that were received and discuss the changes that have been made to the Regulations. Engagement will be made in both official languages.
Changes to the Regulations following prepublication
As a result of the consultations following prepublication, AAFC has made changes to four sections of the prepublished Regulations.
(1) Addition of sheep and goats as eligible breeding animals (section 1.5)
- The Canadian Federation of Agriculture and the Canadian sheep farmers requested that AAFC add sheep to the classes of breeding animals being proposed for eligibility under the program, which will now include cattle and hogs.
- Upon reviewing the request, AAFC agrees that adding sheep as an eligible class of breeding animals would greatly benefit this sector. Producers can now use APP funding to expand breeding programs, which will in turn increase the sectors ability to meet the growing demand for sheep products in both domestic and foreign markets. Similarly, AAFC officials have determined that the goat sector faces similar growth opportunities and would also benefit from expanded APP access for breeding livestock.
(2) Changes made for clarification regarding attribution [subsection 5(1)]
- The Manitoba Corn Growers Association has requested, through a written comment, that AAFC clarify attribution rules for situations where two corporations, cooperatives or partnerships are related. Upon review of this request, AAFC agrees that subsection 5(1), as written in the prepublished Regulations, does not adequately address attribution between corporations, cooperatives or partnerships. To address this concern, AAFC has added paragraphs (f) and (g) to subsection 5(1). This change will make certain that all APP advances are correctly attributed. In turn, this will ensure that all program participants remain within the program limits of $400,000 in total outstanding cash advances, and $100,000 interest free per program year.
(3) Clarification to section 6.2
- a. Clarification regarding security requirements (section 6.2)
- Through the consultation process AAFC officials realized that section 6.2 of the prepublished Regulations did not adequately convey the intended purpose of the amendment. The intention of this amendment is to give producers new security options to replace AgriInsurance and AgriStability while maintaining the requirement under the current Regulations that all producers must agree to pledge the commodity for which the advance was made and any agricultural product produced by the producer in subsequent production periods.
- As a result of this comment, section 6.2 has been amended to correctly convey the aforementioned intention.
- b. Clarification to subparagraph 6.2(a)(iii)
- The Agricultural Credit Corporation has suggested the removal of “monetary investments” as an example of financial collateral under subparagraph 6.2(a)(iii), now paragraph 6.2(2)(c). Upon review of this comment, AAFC agrees that this example was not necessary. It was felt that the use of “monetary investments” as an example implied that “monetary investments” would, without question, be accepted as a form of security. When, in fact, all securities under this section must first be reviewed and agreed to by the Minister.
- As a result of this comment, subparagraph 6.2(a)(iii) has been clarified by removing “monetary investments” as an example from this subsection.
(4) Clarification regarding producer files [paragraph 7(1)(a)]
- Several third-party administrators, (Canadian Canola Growers Association, Agricultural Credit Corporation) indicated that the wording in paragraph 7(1)(a) was not clear. The intention of the paragraph was to clarify in the Regulations, when a third-party administrator makes a request to the Minister of Agriculture and Agri-Food to honour a loan guarantee, that the third-party administrator must include supporting documentation from the producer’s APP file, which is held directly by the third-party administrator.
- Upon review, AAFC officials agree that the intent of this paragraph was not accurately captured in the prepublished Regulations and, as written, would have required third-party administrators to obtain documents supporting the request directly from the producer. As a result of this comment, paragraph 7(1)(a) has been amended and now allows third-party administrators to submit documents supporting the request to be from the producer’s file, which is already in the possession of the third-party administrator.
Base Year 2016
Final Year 2025
Total Net Present Value
Annualized Net Present Value
A. Quantifiable impacts
Interest-free portion of cash advance
AAFC payment of interest-free portion cash advance
Net financial impact
B. Qualitative impacts
Impact of the changes resulting from prepublication consultations
The changes to the Regulations resulting from the pre-publication will have minimal impact on the cost-benefit statement. Three of the four changes do not result in an increase or decrease in costs for the Government or industry. The purpose of these changes is to clarify the language in these sections of the Regulations and ensure that the amended Regulations convey the intended purpose of the legislative changes to the AMPA. As a result, the benefits and costs, as prepublished in the Canada Gazette, Part I, fully consider these changes and remain accurate.
The addition of sheep and goats as eligible breeding animals (section 1.5) will result in a minimal change in the cost-benefit analysis. Sheep and goats producers received approximately $2.7 million of the total $2.0 billion advanced through the APP in 2014 (0.14% of the total advances issued). The relatively small size of the sheep and goat sector in relation to the entire agricultural industry significantly limits the overall impact of this change.
Further, the addition of sheep and goats as eligible breeding animals applies only to those producers who are selling animals intended to be used as breeding stock, or former breeding animals being sold for slaughter. This represents a small segment of the industry and will result in an estimated annual increase in overall APP advances of approximately $240,000 (0.012% of the total $2.0 billion advanced in 2014).
Analysis shows that the new APP advances will be within the $100,000 interest-free element of the program. As a result, the federal government will incur increased financing costs, as well as costs associated to default risk by approximately $8,151 per annum.
For producers, the $8,151 paid by the federal government is a benefit, as this represents the interest the producer would have had to pay a financial institution if the producer had borrowed this money outside of the APP.
Impacts on producers
The regulatory amendments broaden APP access to agricultural producers across Canada through increased program flexibility and streamlined administrative requirements. The amendments also increase the number of commodities eligible for an APP cash advance and provide new forms of security that are eligible for use to obtain an advance under the program.
The amendments (addition of new commodities and new types of security, third-party guarantors, etc.) are expected to increase producers uptake of the APP. As AAFC pays the interest costs for the first $100,000 of each APP cash advance, AAFC estimates the monetized benefit to producers to be approximately $946,051 per annum in saved interest costs. If it were not for APP, producers would have to borrow this money and pay interests to the lender.
The resulting increase in cash advances on new eligible commodities and new producers who were once considered ineligible to participate in APP before these regulatory changes will also bring qualitative benefits for these new producers. Cash advances help to improve a producer’s cash flow to assist with production costs and allow more time to make marketing decisions when prices are more favourable.
The regulatory amendments are not expected to result in any increased costs to producers participating in the APP.
Impacts on third-party administrators
The regulatory amendments will result in non-monetized benefits for third-party administrators. Increased program flexibility and the streamlining of the administrative process are directly related to comments received by third-party administrators during the consultation process and will enable administrators to reduce effort on elements of the program deemed unnecessary and refocus these resources into the day-to-day management of the program.
The regulatory amendments are not expected to result in any increased cost to third-party administrators.
Impacts on the federal government
As a result of these regulatory changes, it is expected that producer participation in the APP will increase. The addition of new eligible commodities, third-party guarantors and new securities to secure APP cash advances are some of the changes that will broaden producer access and increase the number of cash advances issued in a program year.
Since AAFC pays the interest of the first $100,000 borrowed for each producer, it is estimated that AAFC’s program costs will incrementally increase by $946,051 in 2016–2017 as a result of these regulatory amendments.
The regulatory changes are consequential to the legislative amendments made to the AMPA when the AGA received royal assent on February 25, 2015. The legislative changes are forecasted to result in cost savings, which will offset the incremental costs associated to these regulatory amendments. With these regulatory changes in place, the program will stay within its $65.9 million annual allocation.
Impact on financial institutions
These regulatory amendments are not expected to result in any increased costs or benefits for financial institutions.
Implementation, enforcement and service standards
These amendments to the Agricultural Marketing Programs Regulations come into force in conjunction with the remainder of the amendments to the Agricultural Marketing Programs Act resulting from the Agricultural Growth Act. They provide increased clarity and consistency in the application and interpretation of the Regulations.
The changes to the APP will be communicated to third-party administrators during the normal course of business. Additional communication to producers will also be issued via the APP Web site and other available media.
Agriculture and Agri-Food Canada