Growing Forward 2

[farmaholic]

If the new program is covering the lesser of your olympic reference margin or eligible expenses, does it mean the farms that are expanding getting better coverage? You need extra inputs to farm extra acres. Does it therefore favor expansion?

I think Sask99 has a good handle on the program, am I seeing this right? Comments anyone?

[mbratrud]

This program does not favor expansion, not only does your reference Margin gravitate to allowable expenses but 70%. For many Farms the "allowable expenses only represent 50% of expenses. So say my Allowable expenses are $120 Land is $50 and Equipment is $50 and cost of living is $20 (just numbers for easy math). I am buying insurance to cover $84 of $240 total expenses, not really a great driver for expansion.
The old program was drove expansion much more than this one. IMHO

[sumdumguy]

Only major allowable expenses are fertilizer, fuel
and non-arms length wages, correct?

[sumdumguy]

Only "arms length" wages (non related people) are allowable and like in the past, if no T4's prepared, CRA used the opportunity to come and have a look.

Remember guys that if your allowable expenses is your reference margin limit, your non allowable expenses are easier to cover with any crop harvested, net worth etc.

The other thing is its not a straight 70% until you drop to the point in which coverage kicks in. In the past, your claim year only had to drop to 85% but now its 70%.

The new rules won't favor expansion as much as it did before. If anything, it will make farmers sharpen their pencil for all major decisions such as land rent and equipment purchases.

Strange enough, it something I think all should have been doing before anyway (if they were not already)

[farmaholic]

Who is going to participate in the new program? So much for having a good reference margin.