Manitoba’s Keystone Agricultural Producers figures it has the answer to a missing link in the farm income stabilization puzzle.
KAP suggests a registered farm stabilization plan, or RFSP, that would allow farmers to deposit funds into a personal fund tax-free that they could withdraw when income drops. No government investment would be required.
The RFSP idea has been pitched to federal and provincial ministers and received encouraging responses, said KAP president David Rolfe.
The Canadian Federation of Agriculture also has heard the pitch but reserved judgment, he said.
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“I think they are waiting to see if the government drops the CAIS (Canadian Agricultural Income Stabilization) deposit requirement before they decide whether to embrace this,” said the Manitoba farmer. “Some of the federal people we spoke to wondered why this hasn’t been proposed before.”
Agriculture ministers have conceded the unpopular CAIS deposit must be changed, but that may not happen until summer, after they receive the first report of the CAIS review committee.
Rolfe said the RFSP proposal makes sense for an industry that has lost key programs such as the popular Net Income Stabilization Account program.
It would allow farmers to deposit pre-tax money in a fund that would be available when the need was there. Tax would be paid on withdrawals, allowing income averaging.
Unlike NISA, farmer investment would attract no government matching funds and no interest-bonus program. And unlike NISA and CAIS, there would be no formula-driven withdrawal triggers.
Rolfe said the KAP proposal would be a logical alternative to the CAIS requirement that farmers make a deposit before they are eligible for coverage. Farmers have criticized that requirement as a waste of money, often borrowed, to access a safety net program.
