CAIS Thoughts

[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.