RESTRICTED

2 May 1995

(95-1119)

Original: English

Committee on Subsidies and Countervailing Measures

SUBSIDIES

Notifications Pursuant to Article XVI:1 of the GATT 1994

and Article 25 of the Agreement on Subsidies and

Countervailing Measures

CANADA

The following full notification has been received from the Permanent Mission of Canada.

In view of the decision taken by the CONTRACTING PARTIES of the GATT 1947 on Avoidance of Procedural and Institutional Duplication (L/7582, dated 13 December 1994) this notification is deemed to be also a notification under Article XVI:1 of the GATT 1947.

TABLE OF CONTENTS

Page

PART I: GENERAL PROGRAMMES

1. Special Agricultural Income Assistance Programme (1990) 4

2. Canadian Agricultural Market Development Initiative (CAMDI) 4

3. Canadian Agri-Food Development Initiative (CAFDI) 5

PART II: LIVESTOCK AND PRODUCTS

Page

PART III: CROPS AND PRODUCTS

A. GENERAL 21

2. Crop Insurance 23

B. GRAINS AND GRAIN PRODUCTS 27

and Grain Products Outside the Canadian Wheat Board Designated Area) 30

C. OILSEEDS AND OILSEED PRODUCTS 38

D. FRUITS AND VEGETABLES 39

E. SUGAR AND RELATED PRODUCTS 45

IV. TABLES

Table 1 Milk Products - Supply and Disposition 49

Table 2 Beef: Supply and Disposition 54

Table 3 Veal: Supply and Disposition 55

Table 4 Mutton and Lamb: Supply and Disposition 56

Page

IV. TABLES (Cont'd)

Table 5 Pork: Supply and Disposition 57

Table 6 Supply and Disposition for Grains and Oilseeds, Canada

Crop years 1987-88 to 1992-93 (KLT) 58

Table 7 Fresh Fruits - Supply and Disposition 64

Table 8 Dried Beans 67

I. GENERAL PROGRAMMES

1. Special Agricultural Income Assistance Programme (1990)

(a) Nature and extent of the payments

(i) Background and authority

The programme was approved under the authority of Section 5 of the Department of Agriculture Act. It provided only one federal contribution of almost $500 million to provinces contingent upon matching provincial funds. The purpose of the programme was to provide financial assistance through Federal-Provincial initiatives for the benefit of producers who had experienced dramatic income drops. These payments were in response to successive years of poor returns in grains and oilseeds, horticulture and other commodities. It was anticipated that the 1990 net cash income of the grains and oilseeds sector would decline by 55 per cent compared to 1989. Horticultural and other commodities were facing similar, though less serious, financial difficulties.

The programme offered aid based on provincial participation. It also included structural measures, changes in Farm Debt Review Fund regulations, credit relief and contributions to crop insurance.

Federal contribution amounted to $486.4 million during fiscal year 1990-91.

The programme helped to stabilize producers' incomes in the short-term against unusual financial difficulties. The existing stabilization programmes had not provided an adequate cushion against the acute problems producers faced in the marketplace at that time.

2. Canadian Agricultural Market Development Initiative (CAMDI)

(i) Background and authority

CAMDI resulted from the amalgamation, into one programme, of the various grant and contribution programmes, including the former Fruit and Vegetable Storage Construction Financial Assistance Programme and the Canadian Agricultural Market Development Fund. The establishment of one "new" programme was intended to ensure greater flexibility and responsiveness of the initiative to industry needs, and to increase operating efficiency. The CAMDI terms and conditions were in effect up to 31 March 1990.

(ii) Incidence

Projects which were eligible for CAMDI funding included:

(iii) Amount of the contribution

Funding was provided up to 50 per cent of eligible project costs, to a maximum of $250,000 annually or $750,000 over the life of the initiative. Where there was more than one source of government assistance, the level of support from all federal sources could not exceed 50 per cent of eligible costs, nor could support from all government sources (provincial and federal) exceed 75 per cent of eligible costs.

Actual levels of assistance offered were often lower than the maximum 50 per cent rate and, on average, were less than $50,000 over the life of the project. In fiscal year 1988-89, $834,727 was committed towards 36 projects, for an average contribution of $23,187 per project. In 1989-90, $2,197,219 was committed towards 36 projects, for an average contribution of $51,098 per project.

The CAMDI facilitated improvements in the marketing of Canadian agricultural and food products by providing financial assistance for selected projects concerned with market development for traditional and new or improved projects in both established and new markets.

(a) Nature and extent of contribution

(i) Background and authority

The Canadian Agri-Food Development Initiative (CAFDI) is the consolidation of the former Production Development Assistance Initiative (PDAI), including the Crop Development Fund (CDF), and the Canadian Agricultural Market Development Initiative (CAMDI) which were in effect from 1 April 1985 to 31 March 1990. CAFDI is a financial contribution programme administered by the Market and Industry Services Branch (MISB). It operates under Terms and Conditions approved by Treasury Board on 28 September 1989 and amended on 10 April 1992. The programme came into effect in 1990-91 and will expire 31 March 1995.

(ii) Incidence

Projects eligible for CAFDI funding include:

(iii) Amount of the contribution

Funding may be provided up to 50 per cent of eligible project costs to a maximum of $250,000 a year or $750,000 over the project's duration. Maximum government assistance may not exceed 50 per cent from all federal sources nor 75 per cent from all government sources combined.

(iv) Estimated contribution per unit

Actual levels of assistance are usually less than $250,000 per year and $750,000 over the life of each project. In fiscal year 1990-91, $1,788,865 was committed towards 111 projects. In 1991-92, $1,669,168 was committed towards 103 projects, averaging about $16,000 per project with funding ranging up to $150,000. In 1992-93, $1,177,229 was committed towards 97 projects and in 1993-94, $927,206 was committed towards 86 projects. Generally, contributions are in the $5,000.00-$50,000.00 range.

(b) Effect of the programme

The CAFDI encourages economic development in the Canadian agri-food sector by providing financial assistance for selected projects which contribute to improved competitiveness, more market responsiveness and greater self-reliance in the agri-food sector. The CAFDI encourages national policies which reflect regional diversity and sustainable agricultural practices.

4. Farm Income Protection Act Revised Statutes Canada Chapter 22 (1991)

(a) Nature and extent of the programme

(i) Background and authority

The Farm Income Protection Act (FIPA) provides income stabilization for farmers across Canada. It took effect 1 April 1991. FIPA reflects a collective government-industry effort to create an integrated safety net for farmers.

(a) a net income stabilization account programme (NISA);

(b) a gross revenue insurance programme (GRIP);

(d) and a crop insurance programme.

Collectively these programmes offer complementary protection for the agricultural industry. These programmes are guided by the following principles:

(i) market neutrality,

(ii) equity among commodities and recognition of regional diversity,

(iii) long-term social and economic sustainability of farm families,

(iv) consistency with international obligations,

(v) long-term economic and environmental sustainability.

FIPA reflects a tripartite approach to risk protection. The FIPA programmes are managed in conjunction with the federal government, provinces and producers. By virtue of their tripartite nature, the programmes share many common characteristics such as shared responsibility for financial contributions, policy and programme development.

These programmes:

Products covered by FIPA account for 90 per cent of all farm production, in terms of number of products, about 73 per cent of the value of farm production, measured by farm cash receipts, and over 99 per cent of Canada's seeded acreage.

(b) Effect of programme

FIPA calls for these various complementary agreements in order to create a comprehensive risk protection programme. The use of several components is necessary because the diversity of products, prices, costs, markets, cycles and data collection capabilities within the agricultural sector make it difficult to stabilize farm income through any single method.

5. Net Income Stabilization Account Programme

(a) Nature and extent of programme

(i) Background and authority

Under the authority of the Farm Income Protection Act, the Net Income Stabilization Account (NISA) programme was established to assist producers in stabilizing their farming income. Producers reporting net sales of grains, oilseeds, special crops, edible and non-edible horticulture, honey and ranch furs were eligible to participate in NISA. The commodities eligible for contribution were province specific. The programme is ongoing.

(ii) Incidence

Participants annually deposit 2 per cent of their eligible net sales into their own individual stabilization account. Participants' deposits are matched by contributions from the federal and provincial governments at 1 per cent each. Producer participation is voluntary.

Producer withdrawals from their accounts are allowed if their current year gross margin declines relative to their average margin for the previous five year period. Also, withdrawals are allowed if their net income is below a minimum threshold of $10,000 (or $20,000 for a family).

(iii) Amount of payment

These amounts represents payments into producer's NISA accounts for the identified tax year:

(iv) Payment per unit

(b) Effect of the programme

The programme allows producers the opportunity for long-term farm income stabilization. The programme reduces the potential impact of varying income levels resulting in the misallocation of resources.

II. LIVESTOCK AND PRODUCTS

A. DAIRY PRODUCTS

1. Agricultural support for dairy products

(a) Nature and extent of the programme

(i) Background and authority

The Federal Government supports the price received by dairy farmers through an offer to purchase programme complemented by dairy subsidy. A government agency, the Canadian Dairy Commission, supports the price of industrial milk through offering to purchase butter and skim milk powder at a price in combination with a direct payment sufficient to maintain the target return set for dairy farmers. Milk production in Canada is restricted through farm level production quotas. The national supply management system for industrial milk is governed by a joint federal/provincial agreement administered by the Canadian Dairy Commission.

In July 1990, the Minister of Agriculture gave the Canadian Dairy Commission the mandate to establish dairy target and support prices for 1 August 1990 and 1 February 1991, after receiving advice from its Consultative Committee. Prior to 1 August 1990, federal cabinet determined these prices. This authority has been extended to the 1994-95 dairy year.

(ii) Incidence

Federal dairy support policy consists of supporting the market prices of butter and skim milk powder through an offer-to-purchase programme and making direct payments under a quota system to farmers for milk and cream used for the manufacture of industrial dairy products.

(iii) Amount of payment

For 1994-95, the amount of direct subsidy payments by the CDC on industrial milk and cream, was set at a rate of $5.43 per hectolitre of milk measuring 3.6 kilograms of butterfat for a total payout of:

(iv) Support prices: ($/Kg)

* CDC announcement to increase support price for butter and skim milk powder.

(b) Effect of programme

The fundamental objectives of the Canadian dairy support programme are to provide efficient milk producers with the opportunity to obtain a fair return for their labour and investment and to provide consumers of dairy products with a continuous and adequate supply of high quality dairy products.

B. LIVESTOCK AND MEAT PRODUCTS

1. National Tripartite Stabilization Programme for Lambs

(a) Nature and extent of the programme

(i) Background and authority

See Farm Income Protection Act (FIPA), in GENERAL PROGRAMMES section, item 4.

(ii) Incidence

Support levels are set at a percentage of the Indexed Moving Average Price (IMAP). The IMAP is the national average market price of lambs, in the same quarter, in the preceding 10 years, adjusted to account for inflation and changes in feed costs.

(iii) Amount of the payment (total)

($'000)     

(iv) Payment for unit (total)

($/Head)

*(N.B. The fifth quarter appears due to a change in the calculation of the lamb year).

(b) Effect of the programme

Payments help stabilize producers' income by reducing the impact of short-term disruptions in market conditions.

2. National Tripartite Stabilization Programme for Hogs

(a) Nature and extent of the programme

(i) Background and authority

See Farm Income Protection Act (FIPA), in GENERAL PROGRAMMES section, item 4.

(ii) Incidence

The support level is equal to the estimated national current cash costs of production in the quarter plus a percentage of the difference (margin) between these cash costs and the national average market price of hogs in the same quarter for preceding 5 years. This is called the guaranteed margin approach.

(iii) Amount of the payment (total)

($'000)

(iv) Payment per unit (total)

($/Head)

(b) Effect of the programme

Payments help stabilize producers' income by reducing the impact of short-term disruptions in market conditions.

3. National Tripartite Stabilization Programme for Cattle

(a) Nature and extent of the programme

(i) Background and authority

See Farm Income Protection Act (FIPA), in GENERAL PROGRAMMES section, item 4.

(ii) Incidence

The support level for slaughter/feeder cattle is equal to the estimated national current cash costs of production in the quarter plus a percentage of the difference (margin) between these cash costs and the national average market price of slaughter/feeder cattle in the same quarter for the preceding five years. This is called the guaranteed margin approach.

Support levels for cow-calf are set at a percentage of the Indexed Moving Average Price (IMAP). The IMAP is the national average market price of feeder calves in the preceding ten years adjusted to account for inflation.

(iii) Amount of payment (total)

($/Head)

(iv) Payment per unit (total)

($/Head)

(b) Effect of the programme

Payments help stabilize producers' income by reducing short-term price shocks.

4. Feed Freight Assistance Programme

(a) Nature and extent of the programme

(i) Background and authority

Under this programme, the Federal Government pays a portion of the transportation costs incurred in shipping feed grains to users in feed deficit areas of British Columbia, the Yukon, Northwest Territories, Atlantic Canada and the peripheral regions of Ontario (such as Northern Ontario) and Quebec (such as Gaspé). This programme is administered by the Livestock Feed Bureau, Grains & Oilseeds Branch, Agriculture and Agri-Food Canada.

(ii) Incidence

The freight assistance rates are set eligible individual destinations based upon the weighted average cost of transportation over the least cost route.

(iii) Amount of the payment

Expenditures on feed freight assistance were $18.2 million in the 1988-89 crop year on 1.9 million tonnes of grain; $16.6 million in 1989-90 on 1.5 million tonnes; $16.6 million in 1990-91 on 1.4 million tonnes of grain; $17.7 million in 1991-92 on 1.4 million tonnes of grain; $17.5 million in 1992-93 on 1.4 million tonnes of grain and $17.8 million in 1993-94 on 1.4 million tonnes of grain.

(iv) Estimated payment per unit

During the 1989-90 crop year, the average expenditure was $10.97 per tonne shipped under the programme; during the 1989-90 crop year it was $10.31; during the 1990-91 crop year, it was $11.82 per tonne. The average expenditure per tonne shipped was $12.27 in 1991-92, $12.25 in 1992-93 and $12.97 in 1993-94.

(b) Effect of the programme

The feed freight assistance programme reduces the freight cost of transporting feed grains to eligible areas.

5. Atlantic Livestock Feed Development Initiative

(a) Nature and extent of programme

(i) Background and authority

The initiative was approved under the authority of Section 5 of the Department of Agriculture Act and Subsection 6(2) of the Government Organization Act, Atlantic Canada, 1987.

The Agreement was designed to promote the development of the livestock feed industry in the Atlantic provinces and to assist them to achieve livestock feed self-sufficiency.

The Agreement included a number of programmes which were designed to:

- increase the quantity and quality of livestock and poultry feed produced in the provinces;

- promote the development and production of new and/or improved feeds;

- improve feed production, processing and utilization systems;

- improve producers' technical and managerial skills related to feed production.

The agreement was administered by a joint federal/provincial management committee, assisted by an implementation committee for each programme. The funding ratio was an 80/20 federal, provincial commitment.

The programme terminated at the end of fiscal year 1993-94.

(ii) Incidence

Applications were made throughout the term of the agreement and reviewed for eligibility purposes on a regular basis over the life of the Agreement. Payments were made in the form of a contribution when project approval was given.

(iii) Amount of payment

These funds were distributed in the form of contributions.

(iv) Payment per unit

Not applicable. (Not all projects were on-farm.)

(b) Effect of the programme

The overall effect of the programme was to improve the quantity and quality of feed production.

6. Special Atlantic Livestock Initiative

(a) Nature and extent of the programme

(i) Background and authority

At the Federal/Provincial Ministers' and Deputy Ministers' meeting at Prince Albert in August 1989, special assistance of $6.0 million was agreed to as a temporary support measure to assist hog, sheep and beef producers in Atlantic Canada experiencing financial difficulty.

The programme is no longer active.

(ii) Incidence

Hog producers received support for all weaners and hogs marketed and indexing 100 and above on backfat, between 1 April 1989 and 31 March 1990. Beef producers received support on all carcasses grading A1, A2 and/or beef feeder cattle and replacement heifers marketed in 1989 from a beef cow/calf herd. Sheep producers received assistance for market lambs and/or breeding stock that were both less than one year of age and marketed in 1989.

(iii) Amount of payment

(iv) Amount per unit

Hog producers received $1.77 per eligible weaner marketed and $2.66 per eligible feeder marketed between 1 April 1989 and 31 March 1990. Beef producers received $37.19 per eligible feeder marketed from a beef cow/calf herd, and/or $37.19 per eligible carcass grading A1 and A2 from a feed lot. Beef producers raising an animal from a beef cow/calf herd through to slaughter received $49.64 per eligible carcass grading A1 and A2. Sheep producers received $13.97 per eligible market lamb of breeding stock.

(b) Effect of marketing programme

The effect of the initiative was to assist hog, sheep and beef producers experiencing financial difficulty.

7. Livestock Drought Assistance Programme (LDAP)

(a) Nature and extent of the programme

(i) Background and authority

Under the Authority of the Prairie Farm Rehabilitation Act (PFRA), the Livestock Drought Assistance Programme was used to provide financial assistance to livestock producers within a drought affected area so that these producers could avoid a reduction of their breeding herds. Unusually low winter and spring precipitation combined with unusually hot spring resulted in severe reductions in pasture and forage yield. Approximately 70 per cent of prairie livestock were in drought affected areas. A federal-provincial coordinating committee recommended the programme to provide assistance to producers to help them maintain their breeding herd numbers.

(ii) Incidence

The Livestock Drought Assistance Programme (LDAP) provided $112 million in direct payments to help livestock producers maintain their breeding stock. PFRA was responsible for administering LDAP in Manitoba and Saskatchewan and for assisting with programme administration in British Colombia, Alberta and Ontario. LDAP was funded equally by Canada and the provinces. Payment levels were calculated on a regional basis in each province. Payment rates in each region were determined on the basis of 1988 forage yields compared to normal for the area. crop Insurance and other available data were used to make the determinations. Payments were pro-rated based on land locations where the producer normally produced forage, or if forage was mostly purchased, where his/her cattle were wintered.

Eligible animals were bred cows and heifers for both beef and dairy operations, bred ewes and nanny goats, mares and fillies as well as herd sires. Elk females were also eligible in Saskatchewan.

An initial and final payment system was used for this programme. Maximum payments were $60/head for cattle, horses, and bison, and $12/head for sheep, goats and elk. Minimum payments were $5/head for cattle, horses and bison, and $1/head for sheep, goats and elk.

Final payments were contingent on producers enroling in forage insurance programmes.

(iii) Amount of payment

The Livestock Drought Assistance Programme (LDAP) provided two payments to livestock producers in drought-stricken areas to help them maintain their breeding stock. The first one was in the 1988-89 fiscal year and the second one in the 1989-90 fiscal year.

*In British Colombia, payment was based on the lesser of eligible animals or tons of feed purchased.

(iv) Payment per unit

Not applicable. This programme paid out differing amounts, varying by region and species of animal.

(b) Effect of the programme

The most significant impact of the programme was the retention of the breeding herd in the drought areas. Farmers had to keep their breeding herds to qualify for programme payments. The payments helped to pay for needed feed or new supplies for their herds.

III. CROPS AND PRODUCTS

A. GENERAL

1. Advance Payments for Crops Act (APCA)

(a) Nature and extent of the programme

(i) Background and authority

The Advance Payments for Crops Act (APCA) is a voluntary programme enacted in 1977. It applies to all storable crops grown in Canada, except wheat, oats and barley grown in the Canadian Wheat Board designated area (see next section on PGAPA). It provides guarantees and funds on principal the interest thereby allowing producer organizations to make a cash advance (loan) to members up to $250,000. Advances are repaid when the crops are marketed. The commodity secured loan provides producers with financial flexibility to defer marketing to more favourable times. Producer organizations use the loan guarantee to negotiate more favourable interest rates from commercial lending institutions.

The programme is administrated by Agriculture and Agri-Food Canada and various producer organizations across Canada, which sign an agreement to establish a line of credit with a lending institution to fund the advances. The interest-free aspect of APCA was removed for the 1989-90 crop year, and the advances became interest-bearing at commercial rates. Interest-free provisions, in various forms, were reinstated for the 1990-91 and subsequent crop years through the Cash Flow Enhancement Programme (CFEP).

Agriculture and Agri-Food Canada guarantees repayment of 98 per cent of the amount a producer organization borrows from a bank and the interest on bank loans made in accordance with the Act. Agriculture and Agri-Food Canada also prescribes the rate of advance per unit of crop and determines the maximum guarantee for each commodity organization.

(ii) Incidence

During 1993-94, advance payments were available to producers of potatoes, carrots, rutabagas, onions, cabbage, apples, pears, sunflower seeds, oats, corn, barley, honey, rye, tobacco, soybeans, canola, alfalfa seed, leeks, and flax.

(iii) Cost of the APCA

(iv) Cost per participating producer

(b) Effect of the programme

The programme supports orderly marketing by providing cash flow for producers at harvest time, thereby reducing pressure to market until supply and demand are better balanced.

2. Crop Insurance

(a) Nature and extent of the programme

(i) Background and authority

The Crop Insurance Act of 1959, revised in 1990, enabled the Federal Government to enter into an agreement with any province to make contributions towards the premium, or the premium and the administration costs of that province's insurance scheme. Risk-sharing arrangements could also be made by way of loans or reinsurance of part of the province's liability whenever indemnities greatly exceeded premiums and reserves. In April 1991 the Farm Income Protection Act (FIPA) received Royal Assent. As a result, the Crop Insurance Act was revoked and the crop insurance programme is now covered under FIPA as a component of an integrated safety net system.

(ii) Incidence

In 1988-89 shared cost agreements were operative with all ten provinces. The programmes operated on a joint basis with producers, provincial governments and the Federal Government sharing the cost of operating the programmes. In Quebec and Newfoundland the Federal and Provincial Governments each paid 25 per cent of the total premium and shared the cost of administering the programme. The producers paid the remaining 50 per cent. In all other provinces, farmers and the Federal Government each paid one half of the insurance premium and the provincial governments absorbed the administration costs. The 1990 amendments provided for a single cost sharing formula allowing for each level of government to contribute 25 per cent of the crop insurance premium and an equal sharing of the administration costs.

Farmers paid 50 per cent of the premium costs.

(iii) Amount of the payment

See Gross Revenue Insurance Plan (GRIP) in CROPS AND PRODUCTS section, subsection A, item 5(a)(iii).

(iv) Payment per unit

See Gross Revenue Insurance Plan (GRIP) in CROPS AND PRODUCTS section, subsection A, item 5(a)(iv).

(b) Effect of the programme

Crop Insurance stabilized a farmer's income by moderating the economic effects of crop losses caused by natural events. Producers and governments pay premiums into crop insurance accounts. Payouts are based on a farmer's average crop yield and are triggered when a farmer suffers a yield loss due to a covered hazard. FIPA authorizes crop insurance as an option under GRIP or through separate crop insurance agreements. The producer share of crop insurance premiums is 50 per cent and the Federal and Provincial Government shares are each 25 per cent under both crop insurance agreements and the crop insurance option of GRIP.

3. Farm support and adjustment measures

(a) Nature and extent of the programme

(i) Background

In April 1991, the Farm Support and Adjustment Measures I (FSAM I) was announced providing financial assistance to producers of grains and oilseeds, special crops and horticulture. It provided additional income and cash flow stability to producers through initiatives that complemented the safety net programmes, encouraging greater producer participation in the Gross Revenue Insurance Programme (GRIP), the Net Income Stabilization Account Programme (NISA).

The FSAM II initiative was announced in October 1991, to provide financial assistance to producers of grains and oilseeds, special crops, horticulture and other commodities. FSAM II was developed primarily in response to the devastating effects of the ongoing downward trend in prices for grains as well as the poor market returns received by horticulture producers and other commodity growers.

The short-term income assistance initiatives addressed farmers' immediate income needs through measures which built on longer-term adjustment and income stabilization programmes thus bridging the gap between short-term need and long-term protection. These provisions fell under the authority of the Farm Income Protection Act.

(ii) Incidence

FSAM I provided a GRIP premium reduction, an incentive for NISA participation, an extension of the Cash Flow Enhancement Programme, an enhancement of the Permanent Cover Programme, and special measures for the horticulture sector.

FSAM II was almost entirely an acreage payment to grain producers.

(iii) Amount of payment

(iv) Payment per unit

Given the variation in the components of FSAM, average payments per producer or per unit are meaningful.

(b) Effect of the programme

While assisting producers who were experiencing significant income declines FSAM I and FSAM II were partially responsible for high levels of participation in the long-term safety net programmes such as GRIP and NISA.

4. Greenfeed Programme

(a) Nature and extent of the programme

(i) Background and authority

Under authority of the Prairie Farm Rehabilitation Act (PFRA), the Greenfeed Programme was used to provide financial incentives to encourage production of summer and winter feed supplies for areas significantly affected by drought in the prairies and to assist in soil conservation. Unusually low winter and spring precipitation combined with an unusually hot spring resulted in severe reductions in pasture and forage yield. Approximately 70 per cent of prairie livestock were in drought affected areas. A federal-provincial coordinating committee recommended the programme to provide livestock feed, moderate feed prices and encourage the seeding of bare land.

(ii) Incidence

The Greenfeed Programme allocated $38 million (50/50 costs shared between the federal and provincial governments) for incentive payments to encourage Prairie producers to harvest drought-affected grain crops as livestock feed. PFRA negotiated the cost-shared agreements with the provinces and issued payments on behalf of Alberta.

Otherwise, the programme was primarily administered by provincial crop insurance corporations.

The list of eligible crops varied by province and by date of planting. Fields required inspection to ascertain that greenfeed was produced.

(iii) Amount of payment

(iv) Payment per unit

The programme paid out $15 per acre. The Federal contribution was $7.50 per acre (50/50 cost shared with the provinces).

(b) Effect of the programme

The overall effect of the programme was to increase the production of greenfeed which offset some of the feed shortage in the drought area. Associated soil conservation benefits were realized by having cover on land that may otherwise have been left bare for an extended period.

5. Gross Revenue Insurance Plan (GRIP)

(a) Nature and extent of the programme

(i) Background and authority

At the close of the 1990-91 crop year, the Western Grain Stabilization Act (an Act to provide income stability to grains and oilseeds producers in the Canadian Wheat Board designated area of Western Canada) was repealed and superseded by the Net Income Stabilization Account and the Gross Revenue Insurance Programme under the authority of the Farm Income Protection Act.

(ii) Incidence

GRIP is a voluntary plan consisting of two components: crop insurance and a revenue protection component. These can be delivered as a single integrated programme or two separate components. Both components are funded through tripartite premium contributions. The two components are described more fully below.

Crop Insurance:

"Crop insurance" stabilizes a farmer's income by moderating the economic effects of crop losses caused by natural events. Producers and governments pay premiums into crop insurance accounts. Payouts are based on a farmer's average crop yield and are triggered when a farmer suffers a yield loss due to a covered hazard. FIPA authorizes crop insurance as an option under GRIP or through separate crop insurance agreements. The producer share of crop insurance premiums is 50 per cent and the Federal and Provincial Government shares are each 25 per cent under both crop insurance agreements and the crop insurance option of GRIP.

Revenue Insurance:

"Revenue insurance" stabilizes a farmer's income by moderating the economic effects of losses due to short-term market risks. It is provided through agreements that establish funds into which producers and governments pay premiums. Under these agreements premiums paid by governments and producers plus interest must equal payouts over time. A target revenue and premiums are established each year. Payments are triggered when the market revenue for an enrolled crop falls below the target revenue. The farmer receives a payment making up the difference.

Producers contribute at least 33_ per cent of the premiums required and the Federal and Provincial Governments share the remainder of the premiums (41_ per cent) by the Federal Government and 25 per cent by the Provincial Governments.

(iv) Amount per unit

(b) Effect of the programme

"Gross revenue insurance" stabilizes the income of farmers through income and yield protection and represents a combination of revenue insurance and crop insurance. The federal-provincial implementing agreement is the National Agreement Establishing a Tripartite Gross Revenue Insurance Plan for Crops (1991).

B. GRAINS AND GRAIN PRODUCTS

1. Western Grain Stabilization Programme (WGSP)

(a) Nature and extent of the programme

This voluntary programme has been subsumed by the Farm Income Protection Act (FIPA) since the 1991 crop year. WGSP was designed to stabilize the income of western grain, oilseed and special crop farmers by protecting them against a sudden drop in cash flow. The programme covered the seven main grains - wheat, barley, oats, rye, flax, canola, mustard seed - and a list of special crops including triticale, mixed grain, sunflower seed, safflower seed, buckwheat, peas, lentils, fababeans and canary seed grown in the Canadian Wheat Board area. Participating producers paid a specified yearly levy rate ranging from a low of 2 per cent to a high of 4 per cent until an allowable individual maximum in eligible grain sale proceeds was realized. The federal government's contribution equalled the levy rate paid by producers plus an additional 2 per cent on all eligible producer proceeds. The programme was administered by the Western Grain Stabilization Administration and the federal government paid all administrative costs.

(ii) Incidence

When the calculated aggregate net cash income to producers of the covered commodities was below the previous five year average, a payment approximately equal to the difference adjusted for producer participation was triggered from the Stabilization Fund. The share of the total payment accruing to each individual producer was in proportion to his/her contribution into the programme over the last three-year period. Participating producers paid in 1987-88 a levy at a rate of 4 per cent of eligible grain sale proceeds.

(iii) Amount of the payment

There were no payments made during the 1988-89 or 1989-90 crop years. In 1990-91 there was a $119 million payment triggered.

(iv) Estimated amount per unit

In 1990-91 the average payment per participating producer was approximately $948.

(b) Effect of the programme

While compensating producers for uncertainty and variation in their returns due to temporary market fluctuations, the programme is neutral with respect to producers' choices of output and input.

2. Western Grain Transportation Act (WGTA)

(a) Nature and extent of the programme

(i) Background

Until January 1984, freight rates on grains moving out of Western Canada were based on levels first set in 1897. Although these fixed rates originally covered the railways' costs of transporting grain, by the 1970's significant problems began to occur. These problems included large annual railway revenue losses on hauling grain, reluctance by the railways to invest in the grain transportation system, and agricultural production distortions in Western Canada. The Western Grain Transportation Act (WGTA), which became effective 1 January 1984 was designed to alleviate these problems.

(ii) Incidence

Under the WGTA, the federal government is required to pay a basic portion of total railway costs of transporting grain that is based on the difference which existed in 1981-82 between the total cost of transporting grain and what producers were then paying for transporting their grain. The federal government can also be required to pay an additional amount as a result of an inflation-sharing provision of the WGTA. A limit was also established for producers' freight rate increases so that freight rates do not exceed a fixed percentage of average grain prices.

(iii) Amount of the payment

In the 1988-89 crop year ending 31 July 1989, the railways received $723.5 million from the federal government for transporting grains and oilseeds, $723.5 million in 1989-90, $724.9 million in 1990-91, $724.5 million in 1991-92, and $726.1 million in 1992-93.

(iv) Estimated amount per unit

In the 1988-89 crop year, government payments under WGTA to the railways averaged about $21.88 per tonne; $21.31 per tonne in 1989-90, $21.06 per tonne in 1990-91, $21.10 in 1991-92, $21.10 per tonne in 1991-92, and $20.14 for 1992-93.

(b) Effect of the programme

The programme increases the portion of transportation costs paid by prairie grain producers; provides railways with adequate revenues to invest in new rolling stock and infrastructure thereby improving and expanding the grain handling and transport system; and partially reduces the distortions affecting prairie agriculture because crops and products benefit more equitably from regulated freight rates.

3. Cash Flow Enhancement Programme (CFEP)

(a) Nature and extent of the payments

(i) Background and authority

CFEP provides non-taxable rebates of interest on advances of less than $50,000 for participants in the Advance Payments for Crops Act (APCA) and the Prairie Grain Advance Payments Act (PGAPA). It was developed for the 1990-91 crop year, as producers were experiencing cash flow difficulties because of depressed markets. The programme has since been extended on a year-to-year basis. For CFEP IV (1993-94), the interest cost was shared on all advances with the producer paying the first 2¼ per cent and the federal government paying the balance on the first $60,000 of advances repaid.

(ii) Incidence

For the 1993-94 cro year, the interest-shared provisions of the cash advances applied to all crops covered under the PGAPA and the APCA, up to a maximum of $60,000 for both programmes.

(iii) Cost of the CFEP*

* Costs reported are for both the APCA and PGAPA programmes combined.

(iv) Estimated programme costs per producer

For the 1993-94 crop year, 44,631 producers under PGAPA and 5,560 producers under APCA participated in the CFEP programme.

(b) Effects of the programme

The programme helps ease the cash flow difficulties for producers by facilitating cash advances under the APCA and PGAPA and provides income assistance through the interest-free benefit.

4. Agricultural Stabilization Act (ASA)

(for Grains and Grain Products Outside the Canadian Wheat Board Designated Area)

(a) Nature and extent of the programme

(i) Background and authority

The main objective of the now repealed Agricultural Stabilization Act (ASA) was to stabilize the prices of agricultural commodities by reducing the risk of short-term income losses due to falling commodity prices and/or rising costs. This was achieved by making deficiency payments to producers for named and designated commodities and federal contributions to the NTSP. The functions of the ASA were subsumed by the introduction of the Farm Income Protection Act (FIPA) in 1991.

(ii) Incidence

A named commodity was identified under the ASA as any one of the following commodities produced in Canada: cattle, hogs, lambs and wool, industrial milk and industrial cream; corn and soybeans; and spring wheat, winter wheat, oats and barley not produced in the designated areas as defined by the Canadian Wheat Board.

A designated commodity was identified under the ASA as any natural or processed product of agriculture (including oats and barley produced in the designated areas as defined in the Canadian Wheat Board Act and not marketed through the Canadian Wheat Board) designated by the Governor in Council as an agricultural commodity.

Deficiency payments were made directly to producers for the difference between the annual average market price and a support level based on a percentage of the previous five-year average market price for each product, indexed for changes in cash costs of production. Payments for a particular crop year could continue over several years, as farm records are submitted.

(iii) Amount of payment

Payments made in the 1990-91 crop year

Payments made in the 1991-92 crop year

(iv) Payment per unit

Payments made in the 1990-91 crop year

Payments made in the 1991-92 crop year

(b) Effects of the programme

Agricultural Stabilization Board payments helped stabilize producers' incomes by reducing the impact of short-term price shocks. By insulating incomes against short-term disruptions in market conditions, this programme helped prevent the misallocation of resources.

5. Prairie Grain Advance Payments Act (PGAPA)

(a) Nature and extent of the programme

(i) Background and authority

PGAPA is a voluntary programme enacted in 1957 and applies to wheat and barley grown in the Canadian Wheat Board (CWB) designated area. The PGAPA allows producers to receive a cash advance (loan) prior to crop sales/delivery when sales opportunities are restricted due to delivery quota constraints, congested elevators, shortage of trains on some train runs and other delivery and marketing problems.

Under the statute, advances to individual producers are available up to $250,000 minus advances taken under the Advance Payments for Crops Act based on crops in storage. The advances are repaid as crop is sold, either by deduction from CWB initial payments or by cash. The PGAPA provides a federal guarantee of funds advanced and associated interest costs.

The programme is administrated by the CWB. The CWB uses its existing line of credit with the financial institutions to fund the advances.

(ii) Incidence

The interest-free aspect of PGAPA was removed for the 1989-90 crop year, and advances became interest-bearing at commercial rates. As in the case of the APCA, interest-free provisions, in various forms, were reinstated for the 1990-91 and subsequent crop years. Advances made to producers totalled $1.1 billion in 1992-93 while $800 million was advanced in the 1993-94 crop year.

(iii) Cost of the PGAPA

(b) Effects of the programme

The programme supports orderly marketing by providing cash flow at harvest, thereby reducing pressure to market until supply and demand are better in balance.

6. At and East Grain and Flour Subsidy Programme

(a) Nature and extent of the Programme

(i) Background and authority

The At and East Grain and Flour Subsidy Programme, which was administered by the National Transportation Agency, provided subsidies to the railways on:

The amount of the subsidy was equal to the difference between the revenues received by the railways from freight rates frozen at the level which were in effect in the 1960s, and the actual costs which they incurred on these movements.

(iii) Amount of payment

Payments were $33.7 million for calendar year 1988 and $18.8 million for calendar year 1989. The final payment, in 1990, was $288,896.

(iv) Payment per unit

This programme evolved in response to a 1959 rate reduction by United States railways for grain movements from points "at and east" of Buffalo, New York to Atlantic ports. The intent of the programme was to ensure that Canadian grain and flour shipments would continue to be exported through Canadian east coast ports, rather than through competing United States ports. This competitive concern no longer exists since the cost of shipping by rail to United States ports is now considerably higher than the cost of shipping by water through the Great Lakes/St. Lawrence Seaway. The subsidy had the effect of diverting traffic away from the Seaway in favour of subsidized rail movements, inconsistent with the government's market-oriented transportation policy. These programmes were terminated effective 15 July 1989 and are expected to result in annual savings of about $40 million.

7. Freight Charges Equalization Programme

(a) Nature and extent of the programme

In the April 1989 Budget the announcement of the elimination of the "at and East" subsidy, also referred to the termination, effective 15 July 1989 of payments to western flour millers through this equalization programme.

Section 272 of the Railway Act froze the "stop-off" rate to flour mills in Eastern Canada "for the purpose of encouraging the continued use of the Eastern ports for the export of grain and flour". Appropriations under the Freight Charges Equalization Programme are designed to equalize freight charges between eastern and western Canada on the transport of flour for export markets. This programme was administered by Agriculture Canada.

Payments were issued to millers in Western Canada in order to equalize the freight "stop-off" charges between Eastern and Western Canada on grain which is processed into flour for export.

Payments under this programme for fiscal year 1987-88 were $770,800, for fiscal year 1988-89 were $526,300 and for fiscal year 1989-90 were $306,178.

The stop-off rate to Eastern mills was frozen under Section 281 of the Railway Act at $0.66 per tonne. The stop-off rate to Western mills was set at compensatory levels which was determined to be $6.90 per tonne.

This payment provided Western and Eastern Canadian millers with equal access to flour export markets. It removed the disadvantage faced by western millers who were constrained by the higher compensatory "stop-off" rates on the transport of raw grain vis à vis eastern millers who paid a fixed rate of 66 cents per tonne.

8. Special Canadian Grains Programmes (SCGP I and SCGP II)

(a) Nature and extent of the programme

Under the authority of Agriculture Canada, the Special Canadian Grains Programme (SCGP) reduced the impact of the European Community/United States subsidy war on Canada's grain sector by enhancing the cash flow of Canadian grain producers.

Beneficiaries were the eligible producers of specific crops in 1986/87 for SCGP I, and in 1987/88 for SCGP II. The SCGP I special cash payment was made on the 1986-87 crop, with payments to producers in 1988. Payments were calculated on the basis of seeded acreage of eligible crops and average yields. Assistance rates reflected the price declines that arose in each commodity from the European Community/United States trade dispute. Payments for SCGP II were received in 1989.

Crops covered under the programme were wheat, barley, oats, rye, mixed grains, corn, soybeans, canola, flax and sunflower seeds, specialty crops and honey.

SCGP II payments were also made on summerfallow within the Canadian Wheat Board designated area. Grains used for silage, forage seed, green feed and hay were excluded. Payments were limited to $25,000 per producer.

Under SCGP II, programme assistance of $1,067 million was paid to 214,559 recipients. SCGP I paid out approximately $984 million. Administration costs were approximately $8 million for each programme.

Average payment per recipient was $4,974 for SCGP II and $4,913 for SCGP I.

The programmes helped offset low world grain prices caused by the European Community/United States subsidy war by enhancing cash flow of Canadian grain producers.

9. Two-Price Wheat Programme

The objective of the Two-Price Wheat Programme (TPWP) was to provide price stability to domestic millers by insulating the domestic wheat price from international fluctuations. Protection was thereby afforded consumers against high world prices and producers against depressed prices.

The Two-Price Wheat Programme was eliminated as of 31 July 1988. It was replaced with a one-year transitional programme entitled "Two-Price Wheat Assistance Payments". This programme was designed to maintain the same level of domestic producer benefits as there otherwise would have been.

Prior to August 1988, the Canadian Wheat Board maintained the domestic price to millers at $7.00 per bushel. The corresponding export price was approximately $4.00 per bushel. The difference between the domestic price and the world price had been paid indirectly by consumers.

The domestic price of wheat is now based on the North American market. Payments under the TPWP were made through the pool accounts to producers.

Total payments through Two Price Wheat assistance for the crop year 1988/89 were $87 million.

(b) Effects of the programme

The programme helped protect consumers against high world prices and producers against depressed prices. The transitional programme was a one year adjustment programme for producers.

C. OILSEEDS AND OILSEED PRODUCTS

1. Agricultural stabilization for oilseeds and oilseed products

(a) Nature and extent of the programme

Under authority of the Agricultural Stabilization Act (ASA), the Agricultural Stabilization Board stabilized the revenues of named commodities including soybeans. Support prices were set at a percentage of the previous five-year average market price indexed for changes in the cash costs of production. Other commodities such as canola could be designated for similar support from time to time. The ASA has been subsumed by the Farm Income Protection Act (FIPA) since 1991.

For named commodities, deficiency payments were made directly to producers for the difference between the annual average market price and a percentage of the adjusted previous five-year average market price for each commodity.

As of the end of fiscal year 1990/91, payments for the 1986/87 soybeans crop year totalled $10,458,608; as of the end of 1991/92, payments for the 1989/90 soybeans crop year totalled $17,917,882 and payments for the 1990/91 soybeans crop year totalled $1,854,528.

As of the end of fiscal year 1989-90, payments for the 1986/87 canola crop year totalled $3,050,439, as of the end of 1990/91, payments for the 1987/88 canola crop year totalled $1,515,049, payments for the 1988/89 canola crop year totalled $216,533 and payments for the 1989/90 canola crop year totalled $237,278.

(b) Effect of the programme

Agricultural Stabilization Board payments helped stabilize producers' incomes by reducing the impact of short-term price shocks. By insulating incomes against short-term disruptions in market conditions, this programme helped prevent the misallocation of resources resulting from short-term price or income stimuli. Long-term price movements were allowed to prevail.

D. FRUITS AND VEGETABLES

1. Agricultural stabilization for fruits and vegetables

(a) Nature and extent of the programme

Under the now repealed Agricultural Stabilization Act (ASA) fruits and vegetables were designated for support. Designated commodity prices were generally supported at the same level as named commodities. In addition, national tripartite stabilization plans were in place for: sugar beets (starting in 87-88), dry edible beans (87-88), apples (87-88), onions (88-89) and honey (88-89).

One of the functions of the Agricultural Products Board, as established under the Agricultural Products Board Act, was to take action in support of the stabilization activities of the ASA. By buying surplus commodities and selling them later, the Board's activities helped stabilize farm incomes. The Board could sell products at prices lower than the purchase price plus handling and storage, only if authorized by the Governor-in-Council.

The functions of the ASA were subsumed by the introduction of the Farm Income Protection Act (FIPA) in 1991.

Deficiency payments were made directly to producers for the difference between the annual average market price and a support level based on a percentage of the previous five-year average market price for each product, indexed for changes in cash costs of production. Payments for a particular crop year can continue over several years, as farm records are submitted.

1987/88 B.C. Pears: Pears grown in British Columbia marketed by 30 June 1988 were designated for support under Order-in-Council P.C. 1988-2590 dated 17 November 1988. A deficiency payment of $9.96 per 100 kilograms was triggered. Total payments made during the fiscal year 1988-89 amounted to $1,289,000. In 1989-90, payments were $16,694, but refunds to the programme were $23,049.

1987/88 B.C. Peaches: The 1987 British Columbia peach crop was also designated for support during 1988-89. Under the Order-in-Council P.C. 1988-2589 dated 17 November 1988, a deficiency payment of $23.16 per 100 kilograms was approved. Total payments amounted to $2,289,000 in 1988-89. In 1989-90, payments were $99,137.

1987/88 B.C. Prunes: The 1987 British Columbia prune crop was designated for support under Order-in-Council P.C. 1988-2591 dated 17 November 1988. A deficiency payment of $11.98 per 100 kilograms was triggered. During the fiscal year 1988-89, total payments amounted to $380,000. For the year 1989-90, payments were $10,532.

1987/88 Sour Cherries: Sour cherries marketed by 30 June 1987 were designated for support under Order-in-Council 1988-1460 dated 21 July 1988. A deficiency payment of 29.62¢ per kilogram was triggered. Total payments in 1988-89 were $2,156,000.

Other programmes administered by the ASA:

1987/88 Red Delicious Apples

Order-in-Council PC 1988-2/2588 dated 17 November 1988 authorized the provision of assistance of 2 cents per pound for all Red Delicious apples produced in Canada in 1987 in an amount not to exceed $5.3 million. This assistance was provided in the form of a contribution to growers under Vote 15, Agriculture Grants and Contributions, pursuant to Section 5(2) of the Department of Agriculture Act. The assistance was provided to compensate the producers for reduced returns caused by large imports of Washington State product at depressed prices. Total payments in 1988-89 amounted to $4,449,000 and $4,000 in 1989-90.

1988 Nova Scotia Apple Transportation Assistance

Due to a large supply of juice apples and a lack of facilities for processing, authority was provided pursuant to Section 5(2) of the Agriculture Act to make a contribution of one-half of the actual cost of transportation of juice apples to facilities in Ontario. This was approved by Order-in-Council PC 1988-1/2588 dated 17 November 1988. Payments were $0.015/lb. to a maximum of $150,000. Actual cost expenditure to date is $73,063.

In 1989-90 payments were also made to 1982 ($693) and 1983 ($10,536) apples, 1983 B.C. pears ($366), 1983 B.C. peaches ($517) and 1983 B.C. prunes ($66). Refunds were made to 1985 ($5,652) and 1977 ($4,813) potatoes and 1977 yellow seed onions ($2,350).

Agricultural stabilization payments helped stabilize producers' incomes by reducing the impact of short-term price shocks. This helped prevent the misallocation of resources.

2. National Tripartite Stabilization Programme for Apples

(a) Nature and extent of the programme

(i) Background and authority

Under the authority of the Farm Income Protection Act (FIPA), the National Tripartite Stabilization Programme (NTSP) stabilizes apple returns.

The programme cost is shared equally between the Federal Government, the province and producers, and hence, government contributions represent 2/3 of total payments. Under FIPA, NTSP for apples is now covered as a component of an integrated safety net system.

The support level for apples is based on the indexed national average market price over the preceding 10 years, adjusted for inflation.

(iii) Amount of payment (total)

A deficiency payment of $15,418,000 has been received by apple growers for the 1987-88 crop. Government contributions account for 2/3 of total. Payments for the 1989 crop have reached $16,637,000. There were no payments for the 1988,1990, and 1991 crop years. Payments for the 1992 crops were at $11,936,200.

The payment per unit for 1987 apples was $35.50 per tonne. For 1989 apples, it was $40.17 per tonne. For 1992 apples, payments were $5.50 per tonne in British Colombia, $26.77 per tonne in Ontario, $41.03 per tonne in Nova Scotia, $13.62 per tonne in New Brunswick and $40.28 per tonne in Quebec.

(b) Effect of the programme

Payments help stabilize producers' income by reducing the impact of short-term price shocks. By insulating incomes against short-term disruptions in market conditions, this programme helps prevent the misallocation of resources.

Under the authority of the Farm Income Protection Act (FIPA), the National Tripartite Stabilization Programme (NTSP) stabilizes white pea bean and other dry edible bean returns to reduce income lost by producers from market risk. Support is based on the guaranteed margin approach. The support price for a year will equal the cash costs of production in the current year plus a percentage of the average margin in the preceding seven years.

The programme is shared equally between the Federal Government, the province and producers, and hence, government contributions represent 2/3 of total payments. Under FIPA, NTSP for dried beans is now covered as a component of an integrated safety net system.

Support is based on the guaranteed margin approach. The support price for a year will equal the cash costs of production in the current year plus a percentage of the average margin in the preceding seven years.

Total payments ($'000)

(iv) Payment per unit

Payment per tonne

(b) Effect of the programme

Payments help stabilize producers' income by reducing the impact of short-term price shocks. By insulating incomes against short-term disruptions in the market conditions, this programme helps prevent the misallocation of resources.

4. National Tripartite Stabilization Programme for Onions

(a) Nature and extent of the programme

Now under the authority of the Farm Income Protection Act (FIPA), this National Tripartite Stabilization Programme (NTSP) stabilizes onion returns to reduce income lost by producers from market risks.

The programme cost is shared equally between the Federal Government, the province and producers, and hence, government contributions represent 2/3 of total payments. Under FIPA, NTSP for onions is now covered as a component of an integrated safety net system.

The support level for onions is based on the Indexed National Average Market Price (IMAP). This is the national average market price over the preceding seven years, adjusted for inflation.

No payments have been triggered under this programme.

No payments have been triggered under this programme

(b) Effect of the programme

Payments help stabilize producers' income by reducing the impact of short-term price shocks. By insulation incomes against short-term disruptions in market conditions, this programme helps prevent the misallocation of resources.

E. SUGAR AND RELATED PRODUCTS

1. National Tripartite Stabilization Programme for Sugar Beets

(a) Nature and extent of the programme

(i) Background and authority

Under the authority of the Farm Income Protection Act (FIPA), the National Tripartite Stabilization Programme (NTSP) stabilizes sugar beet returns.

The programme is shared equally between the Federal Government, the provinces and producers, and hence, government contributions represent 2/3 of total payments. Under FIPA, NTSP for sugar beets is now covered as a component of an integrated safety net system.

Support prices are set at a percentage of the current cash costs of production plus a percentage of the Indexed Moving Average Price received for sugar beets during the previous 15 years.

Total payment ($'000)

Payment per tonne

(b) Effect of the programme

Payments help stabilize producers' income by reducing the impact of short-term price shocks. By insulating incomes against short-term disruptions in market conditions, this programme help prevent the misallocation of resources.

2. National Tripartite Stabilization Programme for Honey

(a) Nature and extent of the programme

Under the authority of the Farm Income Protection Act (FIPA), the National Tripartite Stabilization Programme (NTSP) stabilizes honey returns.

The support price for any given year will equal a percentage of the IMAP. The programme cost is shared equally between the Federal Government, the provinces and producers and, hence, government contributions represent 2/3 of total payments. Under FIPA, NTSP for honey is now covered as a component of an integrated safety net system.

(ii) Incidence

The support level for honey is based on the Indexed National Average Market Price (IMAP). This is the national average market price over the preceding seven years, adjusted for inflation. The support price for any given year will equal a percentage of the IMAP.

(iii) Amount of the payment

Total payment ($'000)

(iv) Payment per unit

Payment per pound

(b) Effect of the programme

Payments help stabilize producers' income by reducing the impact of short-term price shocks. By insulating incomes against short-term disruptions in market conditions, this programme helps prevent the misallocation of resources.

Table 1

Milk Products - Supply and Disposition