RMP is a provincial price support program for Ontario grain and oilseed producers to help offset losses caused by low commodity prices. RMP is a three-year pilot program running from 2007 to 2009, and providing price support for 27 grain and oilseed crops. RMP was designed in consultation with representatives of the grain and oilseed sector and the Ontario Federation of Agriculture as part of the risk management package. RMP is funded by the province only at its usual 40 percent share.
Questions
Eligibility
- Who can participate in RMP for 2009?
- What are my enrolment requirements
- Why do I have to enrol in PI and AgriStability to be in RMP?
- Do I need to enrol in AgriInvest?
- Do I have to enrol in RMP to be eligible for AgriStability or Production Insurance?
- What if I enrolled in RMP and decide I no longer want to participate?
- Can I still enrol in RMP?
- If I want to be in RMP do I need to enrol my winter wheat planted this fall?
- Do I have to pay for RMP?
- Do I have to participate in marketing and/or financial planning courses?
Renewals
Payments
- When will I receive my RMP payment?
- How are payments calculated?
- How are seed corn payments determined?
- How are popping corn payments determined?
- How are proxy crops used to determine the payments for minor crops?
- What happens to the calculation of the 2008 pre-harvest market price if the elevator is not offering bids (forward contracts)?
2008 Payments
- Why are there no pre-harvest payments for 2008?
- What are the survey periods when pre-harvest market prices are determined?
- When will we find out if there will be any post-harvest payments for 2008?
- If there are 2008 post-harvest payments, how will they be calculated?
- If I have declared unseeded acres under RMP, when do I get paid?
Pilot Design (2007-2009)
- How will my AgriStability benefit be affected by my RMP payment?
- How does RMP determine the Cost of Production?
- Are my increased costs, such as fertilizer, going to be reflected in the cost of production?
- Why does the support level not reflect my actual increased costs?
- Why do I have to pay RMP premiums for 2008 and 2009?
Future of RMP
- Will RMP be extended past the three year pilot?
- Who is evaluating the RMP pilot?
- When will the RMP pilot be evaluated?
- Why is the RMP pilot being evaluated?
Answers
Who can participate in RMP for 2009?
Producers are eligible to participate for 2009 if they meet all program requirements and if either:
- they participated in both 2007 and 2008, or
- they participated in 2008 only, or
- they are new to RMP (did not participate in 2007 or 2008).
Producers who participated in RMP for 2007, but opted out or were cancelled for 2008, are not eligible to participate for 2009.
What are my enrolment requirements?
To ensure that producers benefit from RMP and all the risk management tools available, the pilot program included the requirement that producers participate in both AgriStablity and Production Insurance (PI) to be eligible for RMP.
To help make this opportunity available to all producers, both the RMP and PI programs offer a variety of coverage levels. This allows the producer to manage their premium rates and minimize risk. Please contact us to learn about the available coverage options for RMP and PI in 2009.
Why do I have to enrol in PI and AgriStability to be in RMP?
RMP, AgriStability, and PI work together to create an effective risk management strategy for Ontario grain and oilseed producers. By participating in all three programs, producers take full advantage of the protection available from government risk management programs. This decision is a personal management decision that cannot be made by Agricorp. We will be happy to outline all available program details; however, specific examples pertaining to individual producer operations are not available until applications have been submitted.
Do I need to enrol in AgriInvest?
No, to be eligible for RMP you must participate in Production Insurance and AgriStability.
Do I have to enrol in RMP to be eligible for AgriStability or Production Insurance?
No, you may still participate in AgriStability or PI without enrolling in RMP.
What if I enrolled in RMP and decide I no longer want to participate?
Participants can leave RMP without penalty or impact to their eligibility for AgriStability or PI. The cancellation deadline for RMP is April 1 of each program year. Participants who leave RMP during the pilot phase (2007 to 2009) will not be required to repay any previous RMP payments; however, they will not be eligible to participate for the remainder of the pilot.
Can I still enrol in RMP?
The deadline to enrol for 2008 has passed. It was
If I want to be in RMP do I need to enrol my winter wheat planted this fall?
If you want to participate in RMP for 2009, you are required to insure your winter wheat or organic winter spelt by
Do I have to pay for RMP?
The RMP premiums were waived for 2007, the first year of the pilot. Participants are required to pay a premium for 2008 and 2009. The premium rate is based on the producer's chosen coverage level for each crop (100, 95, 90, or 85 percent of the cost of production). The premium is calculated using the following formula:
Premium per crop = (Acres) x (Average Farm Yield/Acre) x (Premium Rate in $/Unit)
Example of a premium calculation
For a corn producer who chooses 95 percent coverage on their corn, has an Average Farm Yield of 150 bushels per acre, and
grows 100 acres of corn, the total 2008 premium for corn would be calculated as follows:
Premium = (Acres) x (AFY) x (Premium Rate in $/unit)
= 100 acres x 150 bu/acre x $0.09/bu
= $1,350
Do I have to participate in marketing and/or financial planning courses?
To make sure that all RMP participants are receiving full benefit of all the risk management tools available, the industry supported a requirement for producers to take financial or marketing courses.
This RMP requirement will not be enforced during the pilot program. You are not currently required to participate in these courses to be eligible for RMP.
When will I receive the RMP renewal package?
RMP participants who enrolled in 2008 will receive a 2009 renewal package in March 2009, with premium rates for the
different crops and coverage levels. Agricorp will automatically renew your RMP coverage at the same coverage levels you had
in 2008. The deadline to change your coverage level for 2009 is
When will I receive my RMP payment?
Payments are triggered when market prices for grains and oilseeds fall below a specific support level for the crop year. There are two pricing periods each program year when market prices are determined and payments could be issued: pre-harvest and post-harvest. The Payment Periods table shows the payment periods for the major crops eligible under RMP.
How are payments calculated?
Because there are two payment periods per year, each RMP payment is calculated using half of the producer's Average Farm Yield (AFY), as shown in the following formula:
Payment = (50% of AFY) x (Acres) x (Support Level - Market Price) x (40%)*
* Note: the 40% reflects Ontario's normal share for a cost-shared program.
Example of a payment calculation
If a producer chooses 95 percent coverage on their corn, with a support level of $4.08/bushel, and the market price for the payment period is determined to be $3.37/bushel, the price difference would be $0.71/bushel. For a producer who grows 100 acres of corn, with an Average Farm Yield (AFY) of 150 bushels per acre, the payment for corn for that period would be calculated as follows:
Payment = (50% of AFY) x (Acres) x (Support Level - Market Price) x 40%
= (75 bu/acre) x (100 acres) x ($0.71/bu) x
40%
= $2,130
How are seed corn payments determined?
Seed corn payments are based on the support levels and market price for commercial corn. The Average Farm Yield (AFY) used to calculate payments is based on the processor norm.
How are popping corn payments determined?
Popping corn payments are based on the support price and the pre-harvest or post-harvest payment amount for corn multiplied by a factor of 2.5. This accounts for the difference in yield potential between popping corn and commercial corn.
How are proxy crops used to determine the payments for minor crops?
For customers who grow minor crops, RMP uses the proxy crop in each county to determine the county AFY and the payment. The proxy crop is the dominant grain and oilseed crop grown in the county where the minor crop is grown. Each county may have a different dominant or "proxy" crop. Payments on minor crops will only be paid if that county's proxy crop is receiving a payment.
Example: If there are two buckwheat producers, one from Elgin and one from Prescott, one may receive a payment and one may not. If the proxy crop for Elgin (soybeans) triggers a payment, the Elgin producer will receive a payment for his buckwheat. If the proxy crop for Prescott (corn) does not trigger a payment, the Prescott producer will not receive a payment for his buckwheat for that pricing period.
What happens to the calculation of the 2008 pre-harvest market price if the elevator is not offering bids (forward contracts)?
On days when the Forward Contract Price source does not offer bids or forward contracts, RMP will omit those dates (daily) when calculating the actual market prices. The location of the price sources and the dates that the prices are collected will remain unchanged.
Why are there no pre-harvest payments for 2008?
Commodity prices were high during the pre-harvest pricing period that ran from January to September 2008. The average pre-harvest market prices are higher than the support levels for all eligible crops in RMP. A payment is triggered only if the market price for a crop falls below the support level at the producer's chosen coverage level.
What are the survey periods when pre-harvest market prices are determined?
The six-month survey period varies for each crop and can be found in the Payment Periods table. The pre-harvest survey periods run from:
- January to June for: canola, spring wheat, and winter wheat (hard red, soft red, soft white, and organic)
- February to July for: spring grain
- March to August for: coloured beans (black, cranberry, Japan/other, kidney, white)
- April to September for: corn and soybeans
When will we find out if there will be any post-harvest payments for 2008?
The six-month survey period for the post-harvest market prices will be completed in March 2009. Agricorp will publish the post-harvest market prices in spring 2009. These market prices will show what crops will trigger a payment and at what coverage level.
If there are 2008 post-harvest payments, how will they be calculated?
Post-harvest payments will be calculated using the standard payment calculation formula shown below:
RMP Payment = (50% of AFY) x (Acres) x (Support Level - Market Price) x (40%)*
* Note: the 40% reflects Ontario's normal share for a cost-shared program.
If I have declared unseeded acres under RMP, when do I get paid?
Any unseeded acreage benefits (USAB) declared under RMP are based on the dominant crop you grew in the previous year. If that dominant crop triggers a pre- or post-harvest payment, you will also receive an RMP USAB payment for that pricing period. Because there are no pre-harvest payments for 2008, there are no RMP USAB payments for the 2008 pre-harvest pricing period. If there are post-harvest payments for your dominant crop and you declare unseeded acres for RMP, you will receive an RMP USAB payment in the spring, calculated using the formula below:
USAB Payment = (unseeded acres) x (50% of AFY for last year's dominant crop) x (Support Level - Market Price for dominant crop) x (40%)
* Note: the 40% reflects Ontario's normal share for a cost-shared program.
How will my AgriStability benefit be affected by my RMP payment?
RMP is an advance on the province's 40 percent share of your AgriStability benefit for the corresponding program year. Producers will keep either the provincial portion of the AgriStability benefit or the RMP payment, whichever is larger. The federal government's 60 percent share of the AgriStability benefit is unaffected. The treatment of RMP as an advance on AgriStability has always been part of industry's program proposal. This is the way ASRA payments are treated in Quebec. Please see the example below.
Example where RMP payment is greater than Ontario share of AgriStability benefit
| AgriStability benefit | $20,000 | $12,000 | $8,000 |
| RMP benefit | $15,000 | ||
| AgriStability cheque | $12,000 | $0 | |
| Total to producer | $27,000 | $12,000 | $15,000 |
| AgriStability benefit | $20,000 | $12,000 | $8,000 |
| RMP benefit | $3,000 | ||
| AgriStability cheque | $12,000 | $5,000 | |
| Total to producer | $20,000 | $12,000 | $8,000 |
How does RMP determine the Cost of Production?
RMP uses a cost-of-production calculation that is similar to calculations used for Quebec's ASRA program. The calculation includes actual costs reported to the Canada Revenue Agency (CRA), as well as a producer salary equal to 90 percent of the average earnings for an Ontario equipment operator. The calculations are updated annually using the most recent and accurate information available.
The cost of production is calculated using the actual costs faced by producers over the most recent three year period as reported to the CRA on T1163 tax forms. The resulting averages are indexed forward using the Eastern Canada Crop Production Farm Input Price Index (FIPI). For example, cost of production for 2009 has been estimated using 2005, 2006, and 2007 tax data (2008 data is not available until fall 2009). This data is indexed forward to 2009 using the FIPI (an increase of 18% from 2006 to 2009, which includes a forecasted estimate of costs for 2009).
The method of determining the cost of production for each commodity has been discussed and agreed upon by government, representatives from Ontario's grain and oilseed industry, and the Ontario Federation of Agriculture (OFA).
Additional details on the cost of production methodology can be found in the program handbook.
Are my increased costs, such as fertilizer, going to be reflected in the cost of production?
Yes. The cost of production is based on actual producers' costs reported in their tax data. By indexing those costs using the Eastern Canada Crop Production Farm Input Price Index, the cost of production will reflect increased costs such as higher fertilizer costs.
Why does the support level not reflect my actual increased costs?
Support levels reflect average costs of production and yields for hundreds of farmers. If producers have become more efficient over time (through cost management or increased yield) then the change in the support level may not reflect the change in an individual's costs of production.
Annual support levels are directly influenced by crop yields, so as yields increase relative costs per bushel/pound decrease. For example, yields for corn, based on the previous ten years, increased by 4 percent from 2007 to 2009. As a result, the cost of production per bushel/pound will increase at a slower rate than cost of production per acre.
Why do I have to pay RMP premiums for 2008 and 2009?
RMP is a price-insurance program. Like all insurance programs, RMP requires all participants to pay a premium to receive coverage. RMP was modeled after the ASRA program in Quebec where producers are also required to pay premiums to be eligible for benefits. The industry proposal has always included premiums as part of the design for RMP.
The program offers a range of coverage options, with lower premiums for lower coverage. Premiums charged to participants are prorated at a 40 percent rate to correspond to Ontario's 40 percent commitment. Producers are not being charged for the 60 percent share of premiums that would reflect federal government participation.
Will RMP be extended past the three year pilot?
The government will decide about any future program after the evaluation of the pilot is complete. The evaluation will investigate how the program works, how producers respond, the strength of the grains and oilseeds sector, and how RMP fits with other programs.
Who is evaluating the RMP pilot?
The grain and oilseed industry and the Ontario Federation of Agriculture (OFA) are active partners in the design and implementation of the RMP pilot and its evaluation.
When will the RMP pilot be evaluated?
The evaluation will take place in the summer of 2009 to meet the needs of the government's financial planning cycle. Planning for the 2010-11 fiscal year begins in the fall of 2009.
Why is the RMP pilot being evaluated?
The Risk Management Program was established as a three-year pilot. Evaluating the pilot will provide valuable information to the ministry, Agricorp, and the industry to help in the design of future business risk management programs.
The authority given to the ministry to offer the pilot requires that an evaluation be performed in or after the final year (2009-10).
Program evaluation is a good business practice for government accountability and helps ensure that programs are achieving their intended goals and the public is getting good value for tax dollars.
