CAIS Thoughts

[k-way]

Supplementary forms are available on the AFSC site (for over a month):

http://www.afsc.ca/Disaster Programs/CAIS Program/CAIS Application Forms.htm

We applied for the 2003 advance, were told we qualified, and then were told that we had to do income tax and supplementary forms to "verify" their estimates that were based on FIDP. Apparently we must have been lying all this time, just because we weren't in NISA! So no money/advance until we do everything the long way around anyway.

As for what margin to pick, we were told by CAIS a month ago to max out your protection limit, at least for the first couple of years until the fallout from BSE levels out. But a neighbour just got told by them the other day that about 85% is your best bet because it will protect you from getting nothing down the road, which will happen at full protection level. The neighbour was also told that they will not be able to change their protection level in future years (up or down). So how is that supposed to work, when the more protection you pay for the less you will get? And you can't change from year to year?

I just wish they would all get thier stories straight or not tell us anything at all. How can you make management decisions with information like that?

The person to talk to at CAIS is Vickie Chapman. She's supposed to be the top person with all the answers. Not that even talking to her seems to help right now.

[fjopp]

I am a fire fighter to my question is why are supply managment farms are not having the same level of insurance is the goverment not supporting supply managment? I think my industy just has a lower risked.

[Yusishen]

The forms at AFSC are for Alberta only, I assume. To clarify, CAIS in Manitoba is run by the federal government and they don't have their forms yet. Just another example of the confusion this supposedly national system is causing.

I was told you can change your protection level from year to year (at the CAIS meeting). I don't know if that's another area that depends on where you live or not.

[skywalker]

Just a little info on what our accountant told us as far as protection level. he said if we were joining cais to go for 92% level or nothing ,cause at this level we get the most gov't money and any time you can get the most from the gov't ,go for it

Jerry

[frustrated1]

CAIS meetings.

From my understanding you can change your % coverage from one year to the next. The crop insurance link looks like a positive thing. The bean counters will collect your numbers then run scenarios with and without crop insurance. If the powers that be determine you've harmed yourself with participating in crop ins, you'll get back your premium. Or up to that maximum. Not sure what happens if you screwed yourself beyond that? Also, IF they allow negative margins, they assume you've got crop ins and if you don't they will deem that you did have at the 70% level and deduct that(in the negative portion). So my take is they are making crop ins look attractive, especially for spot coverage. ie, hail on one quarter where your CAIS may not have paid out. One thing i was happy with is they may have plugged a loophole regarding expansion. I may be mistaken on this one but i understood that an acre may not necessarily be an acre anymore. Expansions will be given additional reference margins equivalent to area average so if you triple your acres your ref margin may not "just triple". Keeps guys from renting a bunch of sand just to farm the program.

[frustrated1]

oh, regarding % coverage. The only time you'll benefit from the full coverage is if you have an absolute complete wreck with no crop ins. If you've got a partial decline the 70% tops you up the same as the 92% would as you can only come up to your margin. Having said that, i'm still going with the max for this year anyhow as the monies are in NISA and maybe I've missed something or they'll change the program 68 more times before actual conception.

[TOM4CWB]

frustrated1;

Full coverage does not "cost" anything on the first year, as the money does not need to go in till Dec 04... and a payment SHOULD be payable by this point.

Except in a total disaster, 100% coverage will be easily attained.

Remember this program works from the top down, by this I mean that a loss (say 20% of the reference margin) will accrue on the top 20%.

So if income is at 80% of a reference margin, the cost is quite small. THis is a strange system. Those who are hurt with the biggest losses... will get less CAIS money... if the farmer did not think they had the resourses to 100% coverage...

All this program does, is put taxed money in a bank somewhere... the reason I think so much was said about the CAIS not being farmer friendly.

[frustrated1]

No arguements there.

I can see where this program, as all the others have been, is against the guy who's diversified to stabalize his own income via other farm means such as cattle. Unless you've got both tanked at the same time you're out. Why shouldn't my grain op be entitled to the same monies as the one across the fence? It didn't lose any less but the other income stabalized it. Fine. Except the farm across the road gets a cash injection and I've got cows and an accountant's bill. Throw the BSE in on the tail of that and think about how much that grain cash would have helped. Not necessarily saying what we do is wrong, we've done it to stabalize our income but I don't appreciate being penalized for trying and the neighbours are driving a new boat purchased with the govt cheque.

[lonewolf]

Hi guys

I am just curious on your thoughts on how useful this program will be. for the cow calf operator a refrence margin of about 18 % is what the feds tell us. Now lets say we are a 100,000 operation and with the margin of about 18000. no sales this year considers us a full disaster. from what I gathered the full reference margin would be paid which is 18000. now our portion is 4680 which is taken out and will have to be replaced nearly immediatley to have coverage for next year. so we have 13320 for expenses and for this example I think that it would not cover fuel and fertilizer. Maybe I have misunderstood how this program is intended to work. if so enlighten me.

[Yusishen]

If you have 100,000 in sales and a margin of 18,000 (after allowable expenses), then if you have zero sales this year, that means your margin is now negative (-82000 based on your example). This is where the whole coverage of negative margins question comes in. My understanding right now is that you are right, you'd only get the 18,000 back (some of which is your money). I'm not sure what happens if they start covering negative margins. Anyone have any ideas on how that might work (if they decide to do it)?

[TOM4CWB]

My understanding is that a cattle loss would be paid for.... if it was an insurable loss that Crop Insurance could have mitigated... it would not be covered.

[frustrated1]

I think the negative margin part has only 70% coverage of the negative portion. But so far it's not in existance. Why do you not have sales? Do they not still value the calves on hand at the end of the year as an elligible inventory adjustment?

[frustrated1]

oops, negative margin is 60%. From our CAIS meeting propoganda:
If the program year is negative you may receive a payment up to 60%of the negative margin.
If you are eligible to participate in Production Insurance but have not, program benefits will be imputed before the negative margin is calculated.

So cattle or hogs, etc would have some benefit to negative margins, grain would be offset with the assumption you took crop insurance. Keeping in mind of course the negative margin(part of amendment three) is not in place as of yet.

[lonewolf]

Thanks for the input. I was giving an easy to use hypothetical situation. I do wonder about the inventory as frustrated has pointed out. I suppose the gents at CAIS would view this as a inventory adjustment and not trigger the program.

Anyway from what I have seen this program will be of little benefit to my farm and as all other future programs will be tied to it I have no choice but to set up an account and join in.