How lucky will you be when it comes to receiving a
2003 CAIS benefit? As Anne Tyler, the US novelist wrote ďPeople always
call it luck when youíve acted more sensibly than they have.Ē Even if
you have already mailed in your 2003 CAIS Supplementary form or have
instructed your accountant to do it for you, it is not too late to use
these tips for maximizing your CAIS benefits:
1. Be sure that you are crop specific
CAIS does not publish a price for every grade of commodity. If you have
an increase in your inventory for CAIS purposes then you will want to
ensure that this increase is not over-valued. For example, a farmer
carrying sample grade canola will want to use a sample price rather than
the published CAIS #2 canola price to maximize their CAIS benefit.
Similarly, a farmer who puts up greenfeed oats would want to ensure that
he provides a silage price for his ending inventory rather than using
the CAIS price for seed oats.
2. Be sure that you are livestock specific
CAIS does not publish a cull animal price. For this reason any cull cows
which are listed with breeding cows will be valued at the December 31,
2003 CAIS price of $700 per animal. Using CanFax prices for a D3
slaughter cow at the same date, a 1,200 pound cow is worth only $96.
This difference of $604 per head would increase your CAIS benefit by
reducing the value of your ending inventory. The same situation applies
to cull bulls.
For this reason, all cow-calf producers should ensure that their cull
animals are categorized correctly on their application.
3. Be sure that your 1998 salary expense is classified correctly on your
2003 CAIS Options Notice
Your 1998 production margin may have been reduced by a misclassified
salary expense. If any amount of your 1998 salaries were paid to your
spouse or children then they should be categorized as non-allowable
expenses. By removing this expense your reference margin will increase,
which may increase your CAIS benefit.
4. Be sure to consider MAAO
The Modified Accrual Accounting Option (MAAO) allows participants to
adjust each year of their individual reference margin for net changes in
inventories, deferred income, prepaids and accounts payable. Producers
should not rule out MAAO based on their experience with CFIP: itís a
case of same name but different results.
This option may considerably increase your reference margin resulting in
a larger CAIS benefit, particularly for cow-calf producers with
increasing herds. Since these forms were released late, producers have
up to ninety (90) days after the date indicated on the CAIS Calculation
of Program Benefits to submit a completed MAAO. You can expect to
receive your calculation of benefits from CAIS once your application has
5. Consider applying for a 2004 CAIS interim withdrawal
In efforts to manage a restricted cash flow due to BSE and crop
failures, producers and feedlot operators should be applying for a 2004
withdrawal. CAIS has been very quick to process these
applications and they are fairly simple to complete.
6. Consider the effects of a structure change on
your unadjusted margin
Benchmark per unit (BPU) figures are used by CAIS for the purpose of
calculating the adjustment to the applicantís actual reference margin
when there has been an increase or decrease in the productive capacity
of your farm or ranch. For this reason it is important for increases in
productive capacity to be correctly reported on Part 5B of your
Cow-calf producers must report the number of cows birthed while feedlot
operators must report the number of head sold. When you report an
increase in your productive capacity, CAIS will increase your reference
margin and, in the process, increase your CAIS benefit.
7. Clearly quantify and communicate any barter transactions among
CAIS may combine the operations of related producers if they are not
financially, legally and operationally independent. They will also
combine operations into a single whole farm if they are engaged in
significant transactions that are not at fair market value.
For the son, who has just starting farming, a whole-farm combination
with his dad may wipe out his chance for a CAIS benefit. CAIS may make
the whole farm combination on the basis that the son used his dadís
equipment to seed his crop. In reality, the son paid for the use of his
dadís equipment by bartering the unpaid machine rental against his own
unpaid farm wages. By communicating this fact to CAIS, a combination of
applications may be avoided.
Parents may sell calves in their childís name to finance their
childrenís post-secondary education. These calves are simply a payment
of farm wages that, depending on how they are reported to CAIS, would
increase the parentís reference margin and their resulting CAIS benefit.
8. Follow-up and review your CAIS Calculation of Program Benefits
You have ninety days upon receipt of your CAIS Calculation of Program
Benefits to request adjustments. Remember that CAIS is processing six
years of financial data, they are categorizing allowable and
non-allowable items, they are attaching price extensions to your
reported inventories, they are making accrual adjustments, they are
evaluating your productive capacity and, if there is a change, they are
applying their structure change calculations. Ensure that you are
receiving your full CAIS entitlement by closely reviewing the benefit
calculations that are provided to you, and by filing any error
adjustments within the ninety days.
The deadline for filing your CAIS Supplementary form is November 30,
2004. For those who have already filed their CAIS application, it may
not be too late to make adjustments. You can call CAIS prior to
November 30, 2004 to have any changes made. The agriculture industry is
dependent upon many factors beyond the producerís control. Luck plays a
big part in the success of a farmer. Winning isnít only about being
dealt the right cards Ė you must know how to play them right.