WORLD TRADE G/AG/N/CAN/8
12September 1996
ORGANIZATION(96-3529)
Committee onAgriculture Original: English/French
NOTIFICATION
Theattached notification concerning newormodified domestic support measures exempt from
reduction (Table DS:2) wasreceived from thedelegation ofCanada on4September 1996.
_______________
CANADA
Theattached notification concerns theAlberta Farm Income Disaster Program (FIDP) asa
newormodified green boxprogram under theprovisions oftheAgreement onAgriculture. Innotifying
theprogram inthisway, Canada isindicating thattheprogram, consistent withAnnex 2ofthe
Agreement onAgriculture, should beexempt from reduction commitments.G/AG/N/CAN/8
Page2
Table DS:2
DOMESTIC SUPPORT: CANADA
Notification under Article 18:3oftheAgreement:
Newormodified domestic support measures exempt fromreduction
(1) Fulltitleofmeasure:
Alberta Farm Income Disaster Program (FIDP).
(2) Domestic legislation reference:
Thisprogram isgiven effect under theAgriculture Financial Services ActofAlberta
(1993).
(3) Detailed description ofmeasure withreference tocriteria:
TheGovernment ofAlberta hasimplemented awhole farmincome based safety netforAlberta
producers called the“Farm Income Disaster Program" (FIDP). Thisprogram wascarefully
designed tomeetthecriteria ofAnnex 2oftheWTO Agreement onAgriculture. Itincludes
allagricultural commodities andisdesigned towork closely withtheCanadian farmincome
taxsystem. FIDP provides ameasure ofstability against largeshort-term declines inafarm’s
program margin. Program margin isdefined asthedifference between allowable farmrevenue
andexpenses. FIDP usesathreeyearmoving average tocalculate eligibility forpayment and
therefore willnotsupport longtermdeclines infarmincomes.
Off-farm income isnotincluded inallowable revenue. Onlyrevenues associated withprimary
agriculture areincluded asallowable revenue. Certain farmexpenses areexcluded from the
calculation inorder toensure thatFIDP doesnotinfluence farm production andpurchase
decisions. Eligible expenses include allfarmexpenses eligible fordeduction under Canada 's
farmincome taxrules except interest, rent,property taxes, machinery rental, depreciation,
landclearing, levelling, draining, andnon-arms 'length salaries. These exclusions minimize
capitalization intolandandmachinery values. Forexample, inorder toensure thattheprogram
doesnotinfluence “buy”versus “rent”decisions forfarmmachinery, bothrental costs and
depreciation areexcluded from thecalculation.
Thefirstyearoftheprogram isthe1995taxyear. Eligibility isbased onthepreceding three
yearaverage (1992-1994). Inorder toensure thatpayments arebased onallrevenue and
expensesrelatedtotheproducer’staxyear,variousadjustmentsaremadetotheprogrammargin.
Forexample, deferred income isadded totheprogram margin intheclaim year. Thisensures
thataproducer cannot increase hisFIDP payment bydeferring income. Other adjustments
toexpenses andinventory arealsomade toensure thatonlyrevenues andexpenses forthe
claim yearareincluded inthecalculation oftheprogram margin. Anycropinsurance payment
isincluded asrevenue inFIDP.
FIDP isavoluntary program withnopremium charges. Anadministration charge islevied
onallapplications. FIDP covers losses inprogram margin between 0and70percent only.
Negative margins arenotcovered under FIDP.G/AG/N/CAN/8
Page3
FIDP conforms tothefollowing basic criteria ofParagraph 1ofAnnex 2oftheAgreement
onAgriculture:
a) FIDPisprovidedthroughapublicly-fundedgovernmentprogramnotinvolvingtransfers
from consumers; and
b) FIDP doesnothavetheeffect ofproviding price support toproducers.
Inaddition, itmeets thepolicy specific criteria ofParagraph 7ofAnnex 2oftheAgreement
onAgriculture, fordirect payments toproducers under government financial participation in
income insurance andincome safety netprograms:
a) Eligibility forpayments under FIDP isdetermined solely byanincome loss. Ifan
applicant 'scurrent yearprogram margin (defined asthedifference between allowable
farmrevenue andexpenses) fallsbelow 70percent ofthereference margin (defined
astheaverage oftheprevious threeyears'program margins), theapplicant iseligible
tomake aclaim. Anyproducer meeting thiscondition iseligible toreceive payments
under FIDP. Payments areonlymade tobring aproducer 'sincome upto70percent
ofhisreference margin.
b) FIDP payments willalways compensate forlessthan70percent oftheproducer 's
income loss.
c) FIDP payments relate solely tofarmincome. Payments donotrelate tothetypeor
volume ofproduction (including livestock units) undertaken byproducers ortothe
prices, domestic orinternational, applying tosuchproduction ortothefactors of
production employed.
d) Where aproducer receives inthesameyearpayments under FIDP andcropinsurance,
thetotalofsuchpayments willbelessthan100percent oftheproducer 'stotalloss.
Other program payments areaccounted forasrevenue forthepurposes oftheprogram
margin calculation under FIDP. Asaresult, theFIDP willnotprovide anincremental
benefit toproducers beyond the70percent reference margin.
(4) Costofmeasure:
Payments under FIDP willnotexceed $200million inanyfiscal year(April 1sttoMarch 31st).
Forthe1995taxation year, theGovernment ofAlberta projects thatpayments willnotexceed
$74million.
(5) Date ofentry intoeffect:
FIDP came intoeffect forthe1995 taxation year(defined asafinancial yearforaproducer
thatendsatanytimein1995).
(6) Period ofapplication:
Forthe1995taxation year, complete applications mustbesubmitted bySeptember 30,1996,
although producers mustindicate theirintention tomake aclaim byJuly31,1996. Theprogram
ison-going.G/AG/N/CAN/8
Page4
(7) Products toprincipally benefit (ifanyindividual product(s)):
FIDP isawhole farmincome safety netprogram. Allproducers ofallagricultural commodities
areeligible.