Business & Policy
Important for federal government to retain deferred cash purchase ticket option for farmers
Team Alberta is warning the federal government of serious financial consequences to farmers if they lose the ability to use deferred cash tickets to manage wide variations in their income.
The potential end of the cash ticket deferral system was included unexpectedly as part of the federal government’s Budget 2017. Team Alberta’s submission to the federal finance department’s consultation process summarizes the specific necessity and utility of this tool in farmers’ business planning strategies and tax management.
“We believe that the government has overlooked the severe impact that farmers would face if this tool was no longer available,” said Kevin Auch, Alberta Wheat Commission Chair. “Farmers operate with a high degree of income volatility due to factors beyond our control and the cash ticket deferral mechanism allows us to manage risk and balance our income to ensure we can still remain profitable.”
The government maintains that the cash ticket deferral mechanism is out-dated since the single desk was dismantled in 2012. But Team Alberta points out that farmers have been exposed to the same income volatility regardless of the Canadian Wheat Board’s (CWB) status, facing many of the same risks they did when the mechanism was first introduced in 1973. Data from the Western Grain Elevator Association (WGEA) indicates that the percentage of cash tickets deferred annually has remained fairly stable throughout and following the end of the CWB’s monopoly.
Team Alberta further points out that removing this management tool could hamper Canada’s ability to increase agri-food exports from $55 to 75 billion per year by 2025 as outlined in the recent federal budget.
“Canada’s agriculture industry is poised and ready to meet these targets,” said Jason Lenz, Alberta Barley Chair. “But we will only be able to meet them if the government works with farmers to eliminate barriers that impede growth.”
Team Alberta’s submission provides examples from accounting firm MNP LLP that demonstrate impact on farm businesses – whether partnerships, sole proprietors, or corporate family farms. The information from MNP shows that removal of the deferral option will have a disproportionate and negative impact on farm operations relative to non-farm Canadian businesses of similar sizes.
“The existing policy allowing for deferral of cash tickets is an important tool in ensuring that farm operations, whatever their business structure, are treated fairly relative to other Canadian businesses,” said Greg Sears, Alberta Canola Chair.
D’Arcy Hilgartner, Alberta Pulse Growers Chair said: “We have a responsibility as a country to ensure that our farmers remain profitable and sustainable. The consequences of this proposed policy change would be dire for many Canadian farmers and severely limit the sector’s ability to meet growth objectives.”
Team Alberta’s submission can be viewed online here.
May 31, 2017 By Top Crop Manager