The Risk Management Program (RMP) is a price support program for grain and oilseed producers to help offset losses caused by low commodity prices. RMP is a three-year pilot program starting in 2007. Payments will be triggered when prices for grains and oilseeds fall below a specific support level based on a cost of production formula.
RMP was designed in consultation with the Ontario Federation of Agriculture and representatives of the grain and oilseed sector and is part of a complete risk management package offered to Ontario producers. For that reason, producers who want to participate in the new program are required to be enrolled in both AgriStability and Production Insurance (PI).
Contents
- Eligibility and program requirements
- Eligible crops
- Coverage and support levels
- Premiums
- Market prices
- Payment calculation
- Payment caps
- RMP payments and AgriStability payments
- RMP payments and overpayments
- Applications and renewals
Eligibility and program requirements
To participate in the Risk Management Program, producers must:
- Grow at least one of the 21 eligible grain and oilseed crops.
- Enrol all of their eligible grain and oilseed crops.
- Pay the premium that corresponds to their chosen coverage level.
- Participate in both AgriStability and Production Insurance.
- Because a number of the "minor crops" do not have Production Insurance plans available for them, that requirement will be waived for any year in which no Production Insurance plan exists for a particular crop.
- Participate in marketing and/or financial planning courses as required by the Ontario Ministry of Agriculture, Food and Rural Affairs. The details of this requirement will be worked out with industry representatives at a later date.
Eligible crops
Eligible crops have been classified as either major or minor, depending on the availability of cost of production and market price data.
| Major Crops | Minor Crops |
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Notes:
- Farm-fed crops are eligible. Crops grown for plow-down are excluded.
- Major and minor crops are treated differently with respect to premiums, support levels, and payments.
Coverage and support levels
Four coverage levels are available for each grain and oilseed crop: 100, 95, 90, or 85 percent of the cost of production. Participant coverage levels will be rolled over based on the previous year's coverage level for that crop. For 2008, that means all participants will have 100 percent coverage for all crops.
A participant may change their coverage level for 2008 by calling Agricorp by May 1, 2008. Participants may choose different coverage levels for different crops. Coverage levels under RMP are not tied to PI coverage levels.
The support level used to calculate RMP payments is equal to the cost of production multiplied by the chosen coverage level.
| Black beans | $0.3078/lb | $0.2924/lb | $0.2770/lb | $0.2616/lb |
| Canola | $0.1840/lb | $0.1748/lb | $0.1656/lb | $0.1564/lb |
| Corn | $4.29/bu | $4.08/bu | $3.86/bu | $3.65/bu |
| Cranberry beans | $0.4349/lb | $0.4132/lb | $0.3914/lb | $0.3697/lb |
| Hard red winter wheat | $4.71/bu | $4.47/bu | $4.23/bu | $4.00/bu |
| Japan/other beans | $0.4349/lb | $0.4132/lb | $0.3914/lb | $0.3697/lb |
| Kidney beans | $0.4349/lb | $0.4132/lb | $0.3914/lb | $0.3697/lb |
| Popping corn | $0.1915/lb | $0.1820/lb | $0.1722/lb | $0.1627/lb |
| Soft red winter wheat | $4.51/bu | $4.28/bu | $4.05/bu | $3.83/bu |
| Soft white winter wheat | $4.61/bu | $4.37/bu | $4.14/bu | $3.91/bu |
| Soybeans | $9.19/bu | $8.73/bu | $8.27/bu | $7.81/bu |
| Spring grain | $0.0850/lb | $0.0808/lb | $0.0765/lb | $0.0723/lb |
| Spring wheat | $5.91/bu | $5.61/bu | $5.32/bu | $5.02/bu |
| White beans | $0.3078/lb | $0.2924/lb | $0.2770/lb | $0.2616/lb |
Premiums
To reflect industry's RMP proposal, the program will require an annual premium to be paid before a payment is issued. Premiums for each commodity will be calculated by taking 12 percent (40 percent of 30 percent) of the difference between the chosen support level and the most recent 10‑year average market price. The 40 percent represents the provincial government's normal share of funding in a cost-shared program. The 30 percent factor was proposed by the industry to represent a producer's one-third share of the premium.
The premium rate is the amount producers will pay once to receive benefit from two pricing period payments in a program year. The total minimum premium a participant can pay per crop is $25. For RMP, the minimum premium rate is $0.01/bu or $0.0002/lb.
| Black beans | $0.0070/lb | $0.0052/lb | $0.0033/lb | $0.0015/lb |
| Canola | $0.0053/lb | $0.0042/lb | $0.0031/lb | $0.0020/lb |
| Corn | $0.12/bu | $0.09/bu | $0.07/bu | $0.04/bu |
| Cranberry beans | $0.0177/lb | $0.0151/lb | $0.0125/lb | $0.0099/lb |
| Hard red winter wheat | $0.13/bu | $0.11/bu | $0.08/bu | $0.05/bu |
| Japan/other beans | $0.0177/lb | $0.0151/lb | $0.0125/lb | $0.0099/lb |
| Kidney beans | $0.0177/lb | $0.0151/lb | $0.0125/lb | $0.0099/lb |
| Popping corn | $0.0052/lb | $0.0042/lb | $0.0030/lb | $0.0017/lb |
| Soft red winter wheat | $0.11/bu | $0.08/bu | $0.06/bu | $0.03/bu |
| Soft white winter wheat | $0.12/bu | $0.09/bu | $0.07/bu | $0.04/bu |
| Soybeans | $0.17/bu | $0.12/bu | $0.06/bu | $0.01/bu |
| Spring grain | $0.0034/lb | $0.0029/lb | $0.0024/lb | $0.0019/lb |
| Spring wheat | $0.17/bu | $0.14/bu | $0.10/bu | $0.07/bu |
| White beans | $0.0070/lb | $0.0052/lb | $0.0033/lb | $0.0015/lb |
Premiums for minor crops
Minor crops will be treated using a proxy approach: premiums and payments will be assessed as if the grower had planted the major crop that covers the largest area in their county, with the exceptions of seed and popping corn. Seed and popping corn will always be assessed as if grain corn had been planted. This methodology is consistent with that used under the former Market Revenue Insurance program.
Market prices
For most eligible commodities, two payments will be issued for each crop year, typically fall and spring. The first (typically fall) payment will be based on the average of forward contract prices for six months prior to harvest of each commodity. The second (typically spring) payment will be based on the average of cash or spot prices for six months during and after harvest. The specific months that compose these six-month periods will depend on the harvest date of each commodity and are listed in the table below.
| Provincial Payment Amount2 |
|||
| Black beans | $0.3048/lb | $0.2833/lb | $0.0086/lb |
| Canola | $0.1772/lb | $0.1632/lb | $0.0056/lb |
| Corn and seed corn3 | $4.08/bu | $3.37/bu | $0.2840/bu |
| Cranberry beans | $0.3831/lb | $0.3633/lb | $0.0079/lb |
| $0.3831/lb | $0.3583/lb | $0.0099/lb | |
| Kidney beans | $0.3831/lb | $0.0214/lb | $0.0086/lb |
| Popping corn3 | $0.1823/lb | $0.1505/lb | $0.0127/lb |
| Soybeans | $9.19/bu | $8.18/bu | $0.4040/bu |
| Spring grain | $0.0737/lb | $0.0645/lb | $0.0037/lb |
| Spring wheat | $5.47/bu | $5.58/bu | N/A |
| White beans | $0.3048/lb | $0.2767/lb | $0.0112/lb |
| Winter wheat | $4.71/bu | $5.08/bu | N/A |
Notes:
1 Minor crops (buckwheat, faba beans, field peas, flax, millet, rye, sorghum, spelt, sunflowers, triticale) are based on the major crop that covers the largest area in your county (e.g., proxy crop).
2 Provincial Payment Amount is the price difference (Support Level - Market Price) times 40% to reflect Ontario's share.
3 Seed corn is based on corn prices. Popping corn is based on corn prices multiplied by 2.5.
Agricorp calculates your RMP payment using percentages, and rounds figures up or down. If you use the published Provincial Payment Amount figures to estimate your payment, your estimate may be close but different than the Calculated Amount shown on the Notice of Payment.
| March - August | September - February | |
| Canola | January - June | July - December |
| Corn | April - September | October - March |
| March - August | September - February | |
| January - June | July - December | |
| March - August | September - February | |
| March - August | September - February | |
| January - June | July - December | |
| January - June | July - December | |
| Soybeans | April - September | October - March |
| February - July | August - January | |
| January - June | July - December | |
| March - August | September - February |
| Forward Contract Prices | Harvest Spot Prices | |
| Average of monthly prices for delivery at a cross-section of Ontario elevators | Average of monthly prices for delivery at a cross-section of Ontario elevators | |
| Average of monthly prices for delivery at a cross-section of Ontario elevators | Average of monthly prices for delivery at a cross-section of Ontario elevators | |
| Corn | Daily averages for Chatham delivery | Daily averages for Chatham delivery |
| Average of monthly prices for delivery at a cross-section of Ontario elevators | Average of monthly prices for delivery at a cross-section of Ontario elevators | |
| Daily averages for Board terminal delivery of Hard Red | Daily averages for Board terminal delivery of Hard Red | |
| Average of monthly prices for delivery at a cross-section of Ontario elevators | Average of monthly prices for delivery at a cross-section of Ontario elevators | |
| Average of monthly prices for delivery at a cross-section of Ontario elevators | Average of monthly prices for delivery at a cross-section of Ontario elevators | |
| Daily averages for Board terminal delivery of Soft Red | Daily averages for Board terminal delivery of Soft Red | |
| Daily averages for Board terminal delivery of Soft White | Daily averages for Board terminal delivery of Soft White | |
| Soybeans | Daily averages for Chatham delivery | Daily averages for Chatham delivery |
| Average of monthly prices for delivery of barley and oats at a cross-section of Ontario elevators | Average of monthly prices for delivery of barley and oats at a cross-section of Ontario elevators | |
| Spring wheat | Daily averages for Board terminal delivery of red spring wheat | Daily averages for Board terminal delivery of red spring wheat |
| Average of monthly prices for delivery at a cross-section of Ontario elevators | Average of monthly prices for delivery at a cross-section of Ontario elevators |
Payment calculation
Payments are triggered when the market price falls below the support level. Each payment will be based on:
(a) 50 percent of the participant's average farm yield(b) the participant's acreage
(c) the difference between the support level and the average market price of the preceding six months.
The payment is equal to (a) × (b) × (c), which is then multiplied by 40 percent to reflect Ontario's share.
Example
Assuming corn is the only commodity produced by this participant, and:
- Average Farm Yield (Historical 10-year): 150 bushels per acre
- Crop Year Acreage (Corn): 100 acres
- Support Level (Cost of Production Based): $4.08 per bushel
- Average Market Price: $3.08 per bushel
- Price differential (between support and average market price): $4.08 - $3.08 = $1.00
Given that there are two payments per year, the following would represent one such payment:
- RMP Payment = Average Farm Yield x 50% x Crop Year Acreage x Price Difference x 40% Provincial Share
- RMP Payment = 150 bu/acre x 50% x 100 acres x $1.00/bu x 40%
- RMP Payment = $3,000
Payment caps
The grain and oilseed industry has recommended that the Risk Management Program include an annual cap on the total payment a producer may receive:
- $130,000 per individual (sole proprietors)
- $390,000 (maximum of three individuals per corporation or partnership)
Individual RMP payments of less than $10 will not be paid out.
RMP payments and AgriStability payments
RMP payments are counted as an advance on the provincial portion of a participant's AgriStability benefit for the corresponding program year. Participants keep the greater of either the RMP payment or the provincial AgriStability benefit. In either case, the final statement will show what portion of the payment is attributed to AgriStability and what portion to RMP.
Example 1:
RMP payment greater than provincial AgriStability benefitIf the combined RMP payment is greater than the provincial portion of the final AgriStability benefit for the corresponding year, the participant will not receive the provincial portion of the AgriStability benefit, but will keep the additional RMP payment
Example 2:
RMP payment less than provincial AgriStability benefitIf the combined RMP payment is less than the provincial portion of the final AgriStability benefit for the corresponding year, the participant will receive the provincial portion of AgriStability, but not the RMP payment.
RMP has no impact on the federal portion of AgriStability benefits.
RMP payments and overpayments
Overpayments from other provincial programs (for example, previous CAIS or AgriStability advances) will be recovered from RMP payments.
Applications and renewals
Renewal packages for the 2008 Risk Management Program have now been mailed to grain and oilseed producers who participated in RMP in 2007.
Producers who did not participate in 2007 may still apply for the 2008 crop year. To apply, producers must contact Agricorp before May 1, 2008.
