New farm aid program

[Ron]

The new program has 2 old components, CASS (funding for training, either on farm skills or totally non-ag related) and the Farm Business Assessment (consultant looks at your farm and helps with business plan?). I have used the CASS program and it is very good. I used it for training for oilfield work (H2s, first aid, and courses at NAIT and SAIT) but it is wide open what they will help with.

The new component is the $25000 support for low income farm families. If your line 150 total taxable income is below $25000 for you and your spouse (includes off farm)the govt will make up the difference? At first this looks like cr-p BUT if you are close to collectable can you juggle your numbers (may create a problem next year) by using your maximum depreciation and NO OIA? There are no provisions for inventory or non-eligable expenses (that I could find).
I think the worst that would happen is you get $25000 in 2005 and have to pay tax on an extra 25 K in 2006. These funds are farm income but not eligable income for CAIS so it wont effect any 06 claim?

The only real issue is you need $50000 in gross farm income in 2005 which leaves out very small farms and large acreages.

I am not an accountant but I know there are some here so please show me where I am wrong.

Thanks

[WoolyBear]

You can also be a very busy sheep producer with 300 ewes, selling 450 lambs @ $100 and not reach the $50000. If you sold your calves @ $700/hd, you would need 70 cows plus. Neither of these are small farmers and can be very profitable if they are doing it without a lot of debt as far as equipment........ Just a thought.

[Ron]

Sorry Wooly Bear, I was thinking of grain farming (250 acres @ $200/ac gross=$50,000)

[WoolyBear]

Good morning Ron........ There was no need for a sorry. I was just adding my 2 cents.

[Ron]

Just talked with CFFOP and they said you cannot refile tax return with different OIA. If you are a late filer you can juggle what you want.

I said even if you had $0 net income for 2005 any accountant would use the OIA to use your base exemption as you will eventually make money (even farming).

For a family with each person taking the base emption of apprrox 13000 (?) you would have a net income of 26000 so nobody will qualify for this?

The website wording looks like you can adjust taxes before applying for CFFOP but they didnt think so (were confused by the possibility).

[charliep]

I should get the CWB to start sending me a retainer for answering their questions.

The EPO is effectively an options strategy (in fact this is how the CWB manages their risk relative to pool returns). You are paying for an option with a significant amount of time value. The CWB also adds their risk premium over and above which is part of what got deposited in the contingency fund/overall pool account last year.

As you indicate, the $19/tonne investment is likely a poor one. The better choices.

Do nothing or use a lower coverage EPO (eg. 80%) or cash price using a fixed price contract and take the $19/tonne you would have spent and buy calls at advantageous times during the year. Lots of other strategies that can keep a farmers opportunity to participate in rallies open (with a caveat you will also endure the pain of lower prices if this is market direction.

[melvill]

Oh, and one more thing, Charlie, that the $19 needs to go toward - puts on the Canuck Buck.

[grassfarmer]

"Neither of these are small farmers and can be very profitable" - really? how greatly profitable can a farm with gross output of less than $50,000 a year be?
Seems we are always complaining that farms,no matter how large, are struggling to make a living yet when the Government introduces a scheme to address these concerns everybody is suddenly saying how profitable small farms can be.

[TOM4CWB]

Lee;

You meant "Call" options, didn't you?

If the CDN$ rises... the grain is worth less... later in the crop year; covered by a call option would reduce risk... not a Put.

Or did I miss something?

[kpb]

I know all the hobby farmers on this site--which is to say lots of people--will hate this but the people of Canada are not really interested in supporting an agricultural habit.

If your farm is grossing less than $50,000 per year you are not a full-farmer and you should not, in my humble opinion, qualify for any government support. If you are someone who wants to farm or ranch because you like the lifestyle, fine, but don't expect the rest of us to support your hobby. I like to golf but I don't expect anyone else to pay for my clubs.

As I have said before, part-time ranchers are one of the biggest problems that those of use who are trying to make a living in this business have to face. It's these sundowners who don't really care what they get for their product (since they don't have to make a profit) that contribute to low cattle prices.

If the gross on your farm is less than $50,000 than I don't think you should expect or hope for government help. If we want to get taken seriously as ag producers surely to goodness we should be able to produce enough to support a family on our farm. And $50,000 gross just won't do it.

Any producer who really wants to can produce more than that. If you can't or won't that's fine, but then don't expect to qualify for programs or get taken seriously by those of us who do earn a living from the land.

kpb

[melvill]

Yes, you're right, Tom. I've got "put" on the brain or I was just having a blond moment. You take your pick.

Yes, to protect against Cdn$ increase in value, use call options.

Good thing you noticed it.

[dfarms11]

Where is the info on this program?

[wilagro]

The amount of GROSS Sales is NOT the whole indicator of Net profitability. It is only one indicator and not the end all or be all.

I know of farmer/ranchers with gross incomes of well over 100 thousand who are skating close to bankruptcy. Circumstances of weather, market conditions and international trade can turn things around rather quickly.

Also know small (half-section) farmers who turn a profit every year. Like my Dad always said: "It isn't what you make but what you spend."

In other words, good management is as important as good fortune.

[rook]

kpb you raise a good point about what is a farmer. On the one hand farmers have more political clout when everyone who grosses 10K is called a farmer. However, if you look at policy, personally I don't want and I don't think taxpayers want policy that treats all farmers the same. We need to ensure farm policy is directed at commercial farmers to help them compete rather than win votes from hobby farmers. Unfortunately, politics comes into play and what is good for the industry doesn't necessarily win you votes for the next election.

[Ron]

this is the link to the program


http://www.agr.gc.ca/policy/income/options/main_e.html

if i did it right?