The AgriInvest program was designed to help Canadian farmers manage small declines in income, but the Canadian Federation of Agriculture wants the government to recognize the benefits of the program are much broader in scope.
As one of the four main business risk management programs under the five-year Growing Forward 2 framework, AgriInvest offers producers a savings account where the government will match 1 percent of allowable net sales, up to a maximum of $15,000 per year.
“Producers are using the program for a wider array of outcomes than just the limited purview of managing small risks. There’s a broader positive outcome from AgriInvest that deals with stability, flexibility and giving producers liquidity,” says Scott Ross, Director of Business Risk Management and Farm Policy with the Canadian Federation of Agriculture.
With Growing Forward 2 expiring in 2018, discussions are starting on the next federal/provincial ag policy framework. The CFA is looking to get a better understanding of how producers benefit from the existing risk management tools.
Objective (from AAFC):
AgriInvest is a self-managed
account that allows producers
to set money aside which can
be used to recover from small
income shortfalls, or to make
investments to reduce on-farm
The total amount sitting in AgriInvest accounts is currently approaching $2 billion, which could raise questions about whether additional government contributions can be justified. Ross says the dollar figure needs to be put into context, noting the grain sector has benefited from several years of strong commodity prices, and since taxable government funds must be removed first, many producers choose to leave money in their AgriInvest accounts to minimize their tax burden.
CFA is recommending producers be given access to their own AgriInvest contributions without triggering the taxable government funds. The farm group is also asking to have the maximum matched producer contribution rate raised to 4.5 percent of allowable net sales with a matching contribution of up to $100,000.
“It’s still early on, but CFA thinks there needs to be a shift in focus on AgriInvest to recognize it as a tool for strategic investment, not just limited to small financial risks,” says Ross.
What do you think? CFA’s AgriInvest survey (found here) is open for responses until November 6th.