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Section III - Supplementary Information

Departmental links to Government of Canada Outcome areas

($ millions)

		2007-2008
Strategic Outcomes/ Program Activity	Actual Spending  - Net	Alignment to Government of Canada Outcome Area
Security of the Food System
Business Risk Management	2,223.6	Program Activity Business Risk Management contributes to the achievement of the Government of Canada's Economic Affairs: Strong Economic Growth outcome area
Food Safety and Food Quality	113.3	Program Activity Food Safety and Food Quality contributes to the achievement of the Government of Canada's Economic Affairs: Strong Economic Growth outcome area
Markets and International @ 70%	80.5	Program Activity Markets and International contributes to the achievement of the Government of Canada's Economic Affairs: Strong Economic Growth and International Affairs: A Prosperous Canada Through Global Commerce outcome areas
National Farm Products Council	3.7	Program Activity National Farm Products Council contributes to the achievement of the Government of Canada's Economic Affairs: Strong Economic Growth outcome area
Total Security of the Food System	2,421.2
Health of the Environment
Environment	444.5	Program Activity Environment contributes to the achievement of the Government of Canada's Economic Affairs: A Clean and Healthy Environment outcome area
Total Health of the Environment	444.5
Innovation for Growth
Innovation and Renewal	511.5	Program Activity Innovation and Renewal contributes to the achievement of the Government of Canada's Economic Affairs: An Innovative and Knowledge-Based Economy outcome area
Markets and International @ 30%	34.5	Program Activity Markets and International contributes to the achievement of the Government of Canada's Economic Affairs: Strong Economic Growth and International Affairs: A Prosperous Canada Through Global Commerce outcome areas
Rural and Co-operatives Secretariats	28.1	Program Activity Rural and Cooperatives contributes to the achievement of the Government of Canada's Economic Affairs: An Innovative and Knowledge-Based Economy outcome area
Canadian Pari-Mutuel Agency	(0.9)	Program Activity Canadian Pari-Mutuel Agency contributes to the achievement of the Government of Canada's Economic Affairs: A Fair and Secure Marketplace outcome area
Total Innovation for Growth	573.2
Total	3,438.8

Note: The figure have been founded to the nearest millions of dollars. Due to rounding, figures may not add to the totals shown.

Table 1: Comparison of Planned to Actual Spending (including FTEs)

($ millions)	2005-2006	2006-2007	2007-2008
	Actual Spending	Actual Spending	Main Estimates	Planned Spending	Authorities	Actual Spending
Business Risk Management	2,568.3	2,442.9	1,272.5	1,524.4	2,291.2	2,227.4
Food Safety and Food Quality	57.8	67.8	120.9	121.0	100.1	113.3
Markets and International	117.1	131.1	112.0	112.2	112.6	115.1
Environment	292.3	382.2	331.7	332.0	440.2	462.5
Innovation and Renewal	335.4	549.4	611.9	679.3	604.1	521.3
Rural & Co-operatives Secretariats	26.3	20.8	27.0	27.0	31.3	28.1
National Farm Products Council	3.6	2.5	3.8	3.8	4.4	3.7
Canadian Pari-Mutuel Agency	15.0	13.2	15.0	15.0	17.7	13.0
Total Gross	3,415.7	3,609.9	2,494.8	2,814.7	3,601.6	3,484.5
Less Respendable revenue	34.1	42.1	60.5	60.5	60.5	45.7
Total Net	3,381.7	3,567.7	2,434.3	2,754.2	3,541.1	3,438.8
Less: Non-Respendable revenue	51.7	74.7	N/A	23.7	N/A	44.3
Plus: Cost of services received without charge1	48.1	57.9	N/A	45.7	N/A	48.2
Total Departmental Spending	3,378.1	3,550.9	N/A	2,776.2	N/A	3,442.8
Full-Time Equivalents (FTE's)	6,225	6,585	N/A	6,564	N/A	6,702

Notes:

⁽¹⁾ Cost of services received without charge includes accommodation provided by Public Works and Government Services Canada (PWGSC), the employer's share of employees' insurance premiums and expenditures paid by Treasury Board Secretariat (excluding revolving funds), Workers' Compensation coverage provided by Social Development Canada, and services provided by the Department of Justice Canada

FTEs = Full-Time Equivalents - reflect only those FTEs funded through the department's appropriated resources. In addition to the actual FTEs of 6,702, there were 45 FTEs employed by AAFC for research funded through collaborative agreements with industry partners and 19 FTEs funded from other government departments. Also, 446 FTEs were employed as students.

Main Estimates figures are as reported in the 2007-2008 Main Estimates.

Planned Spending figures are as reported in the 2007-2008 Report on Plans and Priorities (RPP). Planned spending reflects funds already brought into the department's reference levels as well as amounts to be authorized through the Estimates process as presented in the Annual Reference Level Update. It also included adjustments totalling $319.9 million for funding approved in the government fiscal plan, but yet to be brought into the department's reference levels.

Authorities are 2007-2008 Main Estimates plus Supplementary Estimates and Allotment transfers received during the 2007-2008 fiscal year, as well as adjustments to statutory amounts, internal adjustments and transfers (totalling of $1,106.8 million), as reported in the 2007-2008 Public Accounts.

Actual Spending figures represent the actual expenditures incurred during the 2007-2008 fiscal year, as reported in the 2007-2008 Public Accounts. In certain cases, where Authorized amounts are unspent, they can be reprofiled for use in future years.

The variance between Actual and Planned Spending is primarily attributable to funding received in Budget 2007 for Cost of Production and AgriInvest Kickstart programs, which was not included in the planned spending due to timing.

The figures in the above table have been rounded to the nearest millions of dollars.

Due to rounding, figures may not add to the totals shown.

Table 2: Voted and Statutory Items

($ millions)

		2007-2008
Vote or Statutary item	Truncated Vote or Statutory Wording	Main Estimates	Planned Spending	Total Authorities	Actual
1	Operating Expenditures	605.9	662.3	725.3	683.8
5	Capital Expenditures	28.6	37.2	52.8	32.5
10	Grants and Contributions	595.8	714.1	650.0	614.0
12b	To write-off the projected net drawdown authority used by the Canadian Pari-Mutuel Agency Revolving Fund of up to $500,000 effective March 31, 2008	-	-	0.0	-
15	Pursuant to section 29 of the Financial Administration Act, to authorize the Minister of Agriculture and Agri-Food, on behalf of Her Majesty in right of Canada, in accordance with terms and conditions approved by the Minister of Finance, to guarantee payments of an amount not exceeding, at any one time, in aggregate, the sum of $1,500,000,000 payable in respect of cash advances provided by producer organizations, the Canadian Wheat Board and other lenders under the Spring Credit Advance Program and $1,500,000,000 payable in respect of cash advances provided by producer organizations, the Canadian Wheat Board and other lenders under the Enhanced Spring Credit Advance Program	0.0	0.0	0.0	-
20	Pursuant to Section 29 of the Financial Administration Act, to authorize the Minister of Agriculture and Agri-Food, on behalf of Her Majesty in right of Canada, in accordance with terms and conditions approved by the Minister of Finance, to guarantee payments of amounts not exceeding, at any time, in aggregate, the sum of $140,000,000 payable in respect of Line of Credit Agreements to be entered into by the Farm Credit Corporation for the purpose of the Renewed (2003) national biomass ethanol program	0.0	0.0	0.0	-
(S)	Grants in support of the Cull Breeding Swine Program	-	-	38.0	38.0
(S)	Canadian Cattlemen's Association Legacy Fund	5.0	5.0	7.0	7.0
(S)	Grant payments for the Drought Assistance Package for Livestock Producers	-	-	4.4	4.4
(S)	Grant payments for the Golden Nematode Disaster Program	-	-	0.5	0.5
(S)	Grant Payments for the Agricultural Disaster Relief Program - AgriRecovery	-	110.3	0.1	0.1
(S)	Grants to agencies established under the Farm Products Agencies Act	0.2	0.2	0.6	-
(S)	Grants in support of the Grain and Oilseed Payment Program	-	-	(0.0)	(0.0)
(S)	Class grant payments for the Transitional Industry Support Program	-	-	(0.2)	(0.2)
(S)	Grant Payments for the Canadian Agricultural Income Stabilization Program Inventory Transition Initiative	-	-	(0.7)	(0.7)
(S)	Class grant payments for the Farm Income Program	-	-	(1.0)	(1.0)
(S)	Grant and Contribution Payments for the AgriInvest Kickstart Program	-	-	580.1	580.1
(S)	Grants and Contributions in support of the Cost of Production Benefit	-	-	398.3	398.3
(S)	Grant and Contribution Payments for the AgriInvest Program	-	-	167.3	167.3
(S)	Contributions in support of Business Risk Management Programs under the Agricultural Policy Framework - Production Insurance	407.0	407.0	416.4	416.4
(S)	Contributions in support of Business Risk Management Programs under the Agricultural Policy Framework - Canadian Agricultural Income Stabilization Program	570.5	595.5	377.3	377.3
(S)	Payments in connection with the Agricultural Marketing Programs Act	138.7	138.7	44.1	44.1
(S)	Contributions for agricultural risk management Spring Credit Advance Program Business Risk Management	-	-	8.9	8.9
(S)	Contributions in support of Business Risk Management Programs under the Agricultural Policy Framework - Agriculture Policy Initiatives	4.2	4.2	4.7	4.7
(S)	Loan guarantees under the Farm Improvement and Marketing Cooperatives Loans Act	4.0	4.0	0.7	0.7
(S)	Contributions in support of Business Risk Management Programs under the Agricultural Policy Framework - Province-Based Programs	-	-	(0.0)	(0.0)
(S)	Class contribution payments for the Transitional industry Support Program	-	-	(0.1)	(0.1)
(S)	Contributions to a Transition to Future Risk Management Programming	-	-	(0.3)	(0.3)
(S)	Contributions to the Bovine Spongiform Encephalopathy (BSE) Recovery Program	-	-	(1.0)	(1.0)
(S)	Class contribution payments for the Farm Income Program	-	-	(4.7)	(4.7)
(S)	Class Contribution payments for Repositioning of the Canadian Beef and Cattle Industry	-	-	(8.9)	(8.9)
(S)	Contributions to employee benefit plans	74.3	75.6	74.7	74.7
(S)	Spending of proceeds from the disposal of surplus Crown assets	-	-	3.9	3.5
(S)	Minister of Agriculture and Agri-Food - Salary and motor car allowance	0.1	0.1	0.1	0.1
(S)	Refunds of amounts credited to revenues in previous years	-	-	0.0	0.0
(S)	Collection agency fees	-	-	0.0	0.0
(S)	Canadian Pari-Mutuel Agency Revolving Fund	-	-	2.7	(0.9)
Total		2,434.3	2,754.2	3,541.1	3,438.8

Notes:

(S) denotes a Statutory Item

Main Estimates figures are as reported in the 2007-2008 Main Estimates

Planned Spending figures are as reported in the 2007-2008 Report on Plans and Priorities (RPP). Planned spending reflects funds already brought into the department's reference levels as well as amounts to be authorized through the Estimates process as presented in the Annual Reference Level Update. It also included adjustments totalling $319.9 million for funding approved in the government fiscal plan, but yet to be brought into the Department's reference levels.

Total Authorities are 2007-2008 Main Estimates plus Supplementary Estimates and Allotment transfers received during the 2007-2008 fiscal year, as well as internal adjustments and transfers (totalling $1,106.8 million), as reported in the 2007-2008 Public Accounts.

Actual figures represent the actual expenditures incurred during the 2007-2008 fiscal year, as reported in the 2007-2008 Public Accounts. In certain cases, where Authorized amounts are unspent, they can be reprofiled for use in future years.

The variance between Actual and Planned Spending is primarily attributable to funding received in Budget 2007 for Cost of Production and AgriInvest Kickstart programs which was not included in the Planned Spending due to timing.

The figures in the above table have been rounded to the nearest millions of dollars. For this reason, figures that cannot be listed in millions of dollars are shown as 0.0.

Due to rounding, figures may not add to the totals shown.

Table 3: Sources of Respendable and Non-Respendable Revenue

For supplementary information on the department's sources of respendable and non-respendable revenue please visit:

http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 4: Canadian Pari-Mutuel Agency Revolving Fund

For supplementary information on the Canadian Pari-Mutuel Agency Revolving Fund please visit:

http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 5-A: User Fees Act

For supplementary information on the department's User Fees please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 5-B: Policy on Service Standards for External Fees

For supplementary information on the department's Service Standards for External Fees please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 6: Details on Project Spending

The following projects have or are expected to exceed the Department's delegated project approval level of $5 million:

1. Skyline Campus
2. Enhancements to the delivery systems for the Business Risk Management Programs under the Agricultural Policy Framework
3. Duncairn Dam / Water Infrastructure Upgrades
4. National Land and Water Information Service (NLWIS)
5. Junction Dam Rehabilitation
6. St. Boniface General Hospital
7. Dairy Research Facility
8. Greenhouse and Growth Chamber Facility

Supplementary information on details on Project Spending can be found at: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 7: Status Report on Major Crown Projects

Agriculture and Agri-Food Canada was the lead department and managed the following Major Crown project:

National Land and Water Information Service (NLWIS)

Supplementary information on this Major Crown Project can be found at: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 8: Details on Transfer Payment Programs (TPPs)

Agriculture and Agri-Food Canada managed the following transfer payment programs in excess of $5 million:

1. Canadian Agricultural Income Stabilization (CAIS) / Canadian Agricultural Income Stabilization Inventory Transition Initiative(CITI)
2. Production Insurance
3. Cover Crop Protection Program
4. Bovine Spongiform Encephalopathy (BSE) / Cull Cow
5. Facilitating the Disposal of Specified Risk Materials
6. Spring Credit Advance Program (SCAP)/Enhanced Spring Credit Advance Program(ESCAP)
7. Payments in connection with the Agricultural Marketing Programs Act (AMPA)
8. Cost of Production Benefit
9. AgriInvest Kickstart Program
10. AgriInvest Program
11. Cull Breeding Swine Program
12. Control of Diseases in the Hog Industry - Circovirus Initiative
13. Contributions for Agriculture and Agri-Food Sector Assistance - Environment
14. Contributions for Agriculture and Agri-Food Sector Assistance - Food Safety and Food Quality
15. Canadian Farm Families Options Program (CFFOP)
16. Advancing Canadian Agriculture and Agri-Food (ACAAF)
17. Contributions for Agriculture and Agri-Food Sector Assistance - Science and Innovation
18. Contributions for Agriculture and Agri-Food Sector Assistance - Renewal
19. Plum Pox Eradication Program
20. Canadian Cattlemen's Association Legacy Fund
21. Contributions in support of Rural Canada and of development in the area of Co-operatives
22. Contributions for Agriculture and Agri-Food Sector Assistance - International (Canadian Agriculture and Food International)

Supplementary information on these Transfer Payments can be found at: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 9: Foundation (Conditional Grant)

Agriculture and Agri-Food Canada managed the following foundation (conditional grant) program in excess of $5 million:

Canadian Agri-Food Policy Institute (CAPI)

Supplementary information on the Foundation (Conditional Grant) can be found at: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 10: Horizontal Initiatives

A "horizontal initiative" is an initiative in which partners from two or more organizations have agreed under a formal funding agreement (e.g. Memorandum to Cabinet, Treasury Board submission, federal-provincial agreement) to work toward the achievement of shared outcomes.

The objective of reporting on horizontal initiatives is to provide Parliament and the Canadian public and government with an overall picture of public spending and results achieved by departments working together.

Horizontal initiatives listed below were led by AAFC and were allocated federal funds that exceed $100 million (counting all federal partners) for the duration of the program, or were allocated less than $100 million in federal funds but still considered to be key to the achievement of government priorities, or had a high public profile.

Following is a summary list of horizontal initiatives for 2007-08. More complete information on each initiative, including spending and results, is available on the Treasury Board Secretariat's Horizontal Results Database.

1. Canadian Agricultural Income Stabilization program (CAIS)
2. Canadian Agricultural Skills Services (CASS)
3. Co-operatives Secretariat
4. Farm Business Services
5. MOU with Canadian Food Inspection Agency (CFIA) on Food Safety and Quality
6. AAFC-Department of Foreign Affairs and International Trade (DFAIT) MOU on Agri-Food Specialists Positions Abroad
7. MOU with Environment Canada (EC) on the National Agri-Environmental Standards Initiative (NAESI)
8. MOU with Health Canada (HC) on Food Safety and Quality and Environment
9. Production Insurance
10. Rural Development

Table 11: Sustainable Development Strategy

AAFC's fourth Sustainable Development Strategy highlights the ongoing implementation of the Agricultural Policy Framework and examines progress towards sustainable agriculture in Canada. The SDS also helps to lay the groundwork for the next generation of agricultural policies and programs.

In preparation for the fourth round of SDSs, federal departments worked together to improve coordination and build coherence among the strategies through a set of common federal goals. These goals comprise three environmental quality goals – clean water, clean air, and reduced greenhouse gas emissions. They also include three sustainable development management goals – sustainable communities, sustainable development and use of natural resources and governance for sustainable development. AAFC indicated how the department contributes to these federal goals in SDS IV.

For supplementary information on the department's progress against commitments contained in the Sustainable Development Strategy please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 12: Response to Parliamentary Committees and External Audits

For supplementary information on the department's responses to Parliamentary Committee reports, external audits, reports of the Auditor General of Canada, and internal or external audits and evaluations, please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 13: Internal Audits and Evaluations

For a list of key internal audits and electronic links to completed internal audits for 2007-08 please visit: http://www.tbs-sct.gc.ca/dpr-rmr/st-ts-eng.asp

Table 14: Travel Policies

AAFC follows and uses the travel policy parameters of the Treasury Board Secretariat.

Table 15: Financial Statements of Departments and Agencies (including Agents of Parliament) and Revolving Funds Financial Statements

For the year ended March 31, 2008

This table includes two sets of financial statements: one set for Agriculture and Agri-Food Canada, starting on page 63, and one for the Canadian Pari-Mutuel Agency Revolving Fund, starting on page 92.

Note: AAFC's Financial Statements are prepared in accordance with accrual accounting principles. The unaudited supplementary information presented in the financial tables in the DPR is prepared on a modified cash basis of accounting in order to be consistent with appropriations-based reporting. Note 3 on page 75 of the financial statements reconciles these two accounting methods.

---

Financial Statements (Unaudited)

For the year ended March 31, 2008

Statement of Management Responsibility

Responsibility for the integrity and objectivity of the accompanying financial statements for the year ended March 31, 2008 and all information contained in these statements rests with departmental management. These financial statements have been prepared by management in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Management is responsible for the integrity and objectivity of the information in these financial statements. Some of the information in the financial statements is based on management's best estimates and judgment and gives due consideration to materiality. To fulfil its accounting and reporting responsibilities, management maintains a set of accounts that provides a centralized record of the department's financial transactions. Financial information submitted to the Public Accounts of Canada and included in the department's Departmental Performance Report is consistent with these financial statements.

Management maintains a system of financial management and internal control designed to provide reasonable assurance that financial information is reliable, that assets are safeguarded and that transactions are in accordance with the Financial Administration Act, are executed in accordance with prescribed regulations, within Parliamentary authorities, and are properly recorded to maintain accountability of Government funds. Management also seeks to ensure the objectivity and integrity of data in its financial statements by careful selection, training and development of qualified staff, by organizational arrangements that provide appropriate divisions of responsibility, and by communication programs aimed at ensuring that regulations, policies, standards and managerial authorities are understood throughout the department.

The departmental Audit and Evaluation committee oversees and approves the planning and reporting of audits, evaluations and reviews of departmental policies, organizations, programs, and practices.

The financial statements of the department have not been audited.

Yaprak Baltacioglu, Deputy Head

Pierre Corriveau, Senior Financial Officer

Ottawa, Canada
August 05, 2008

Statement of Operations (Unaudited)

For the year ended March 31, 2008 (in thousands of dollars)

	2008	2007
Expenses (Note 4)
Business risk management	$ 1,930,813	$ 2,840,160
Innovation and renewal	500,933	565,673
Environment	437,349	397,012
Markets and international	104,083	137,313
Food safety and food quality	107,721	70,622
Rural and Co-operatives Secretariats	26,949	20,865
Canadian Pari-Mutuel Agency	13,036	14,043
National Farm Products Council	3,476	2,571
	3,124,360	4,048,259
Revenues (Note 5)
Business risk management	103,658	86,092
Innovation and renewal	20,746	16,285
Environment	24,881	24,122
Markets and international	2,293	2,144
Food safety and food quality	1,754	2,481
Rural and Co-operatives Secretariats	458	-
Canadian Pari-Mutuel Agency	13,855	13,753
National Farm Products Council	96	-
	167,741	144,877
Net cost of operations	$2,956,619	$3,903,382

The accompanying notes form an integral part of these financial statements.

Statement of Financial Position (Unaudited)

As at March 31 (in thousands of dollars)

	2008	2007
Assets
Financial assets
Cash	$ 1,867	$ 657
Accounts receivable (Note 6)	100,989	124,468
Loans and advances (Note 7)	604,637	580,627
Investment in a Crown corporation (Note 8)	1,208,333	1,208,333
	1,915,826	1,914,085
Non-financial assets
Prepaid expenses and inventory	4,515	2,579
Tangible capital assets (Note 9)	338,496	348,069
	343,011	350,648
	$2,258,837	$2,264,733
Liabilities and Equity of Canada
Liabilities
Accounts payable and accrued liabilities (Note 10)	$ 2,383,030	$ 2,848,583
Accrued salaries and vacation	52,325	52,483
Deferred revenue (Note 11)	12,638	11,912
Employee future benefits (Note 12)	95,298	96,878
Other liabilities (Note 13)	316,478	495,186
	2,859,769	3,505,042
Equity of Canada (Note 17)	(600,932)	(1,240,309)
	$2,258,837	$ 2,264,733

Contingencies (Note 14)
Contractual obligations (Note 15)

The accompanying notes form an integral part of these financial statements.

Statement of Equity of Canada (Unaudited)

For the year ended March 31
(in thousands of dollars)

	2008	2007
Equity of Canada, beginning of year	$(1,240,309)	$(962,897)
Net cost of operations	(2,956,619)	(3,903,382)
Current year appropriations used (Note 3)	3,438,828	3,567,722
Revenue not available for spending	(26,197)	(26,544)
Refunds of previous years expenditures	(970)	(521)
Change in net position in the Consolidated Revenue Fund (Note 3)	136,098	27,408
Services received without charge (Note 16)	48,237	57,905
Equity of Canada, end of year (Note 17)	$(600,932)	$(1,240,309)

The accompanying notes form an integral part of these financial statements.

Statement of Cash Flow (Unaudited)

For the year ended March 31 (in thousands of dollars)

	2008	2007
Operating activities
Net cost of operations	$2,956,619	$3,903,382
Non-cash items :
Amortization of tangible capital assets	(41,435)	(37,509)
Gain (Loss) on disposal and non-cash changes in tangible capital assets	335	(257)
Services received without charge	(48,237)	(57,905)
Variances in Statement of Financial Position:
Increase (decrease) in accounts receivable	(23,479)	36,500
Increase (decrease) in loans and advances	24,010	(73,440)
Increase (decrease) in prepaid expenses and inventory	1,936	(1,191)
Decrease (increase) in liabilities	645,273	(240,585)
Cash used by operating activities	3,515,022	3,528,995
Capital investment activities
Acquisition of tangible capital assets	31,858	45,145
Proceeds from disposal of tangible capital assets	(331)	(112)
Cash used by capital investment activities	31,527	45,033
Financing activities
Net cash provided by Government of Canada	(3,547,759)	(3,568,065)
Net cash used (provided)	(1,210)	5,963
Cash, beginning of year	657	6,620
Cash, end of year	$ 1,867	$ 657

The accompanying notes form an integral part of these statements.

Notes to Financial Statements (Unaudited)

For the year ended March 31, 2008
(Tabular amounts in thousands of dollars)

1. Authority and objectives

The Department of Agriculture and Agri-Food Act of 1994 establishes the Department of Agriculture and Agri-Food as a Department of the Government of Canada. Under the Act, the Minister is responsible for agriculture, products derived from agriculture, and research related to agriculture and products derived from agriculture including the operation of experimental farm stations, unless they have been assigned by law to another department, board or agency.

The Department's objective is to promote and support, in a sustainable manner, a growing, competitive, market-oriented agriculture and agri-food industry with principle emphasis on eight program activities:

Business risk management

Enhancing the producer's capacity to manage risk, and increasing the sector's viability and profitability.

Innovation and renewal

Equipping the sector with new business and management skills, bioproducts, knowledge-based production systems and strategies to capture opportunities and manage change.

Environment

Achieving environmental sustainability of the sector and progress in the areas of soil, water, air and biodiversity.

Markets and international

Expanding international opportunities for the Canadian agri-food sector.

Food safety and food quality

Minimizing the risk and impact of food-borne hazards on human health, increasing consumer confidence and improving the sector's ability to meet or exceed market requirements for food products.

Rural and Co-operatives Secretariats

Leads an integrated, government-wide approach, called the Canadian Rural Partnership, through which the government aims to co-ordinate its economic, social, environmental and cultural policies towards the goal of economic and social renewal of rural Canada.

Facilitating relations between cooperatives and federal departments and agencies with legislation or policies affecting cooperatives. As well, the Secretariat provides advice across government on policies affecting cooperatives, coordinates the implementation of such policies, and acts as a centre of expertise on cooperatives within the federal government.

Canadian Pari-Mutuel Agency

To regulate and supervise pari-mutuel betting for the protection of the betting public on a full cost recovery basis, in the most effective and efficient manner possible.

National Farm Products Council

To advise the Minister of Agriculture and Agri-Food on all matters relating to the agencies established under the Farm Products Agencies Act, with a view to maintaining and promoting an efficient and competitive agriculture industry:

• to review the operations of the marketing agencies to ensure they meet their objectives as set out in legislation
• to work with the agencies in promoting more effective marketing of farm products in inter-provincial and export trade
• to work with promotion research agencies in connection with primary production research and promotion activities relating to farm products.

2. Summary of significant accounting policies

The financial statements have been prepared in accordance with Treasury Board accounting policies which are consistent with Canadian generally accepted accounting principles for the public sector.

Significant accounting policies are as follows:

1. Parliamentary appropriations - The Department is financed by the Government of Canada through Parliamentary appropriations. Appropriations provided to the department do not parallel financial reporting according to generally accepted accounting principles since appropriations are primarily based on cash flow requirements. Consequently, items recognized in the statement of operations and the statement of financial position are not necessarily the same as those provided through appropriations from Parliament. Note 3 provides a high-level reconciliation between the bases of reporting.
2. Consolidation - The accounting entity comprises of the department of Agriculture and Agri-Food, the National Farm Products Council, and the Canadian Pari-Mutuel Agency. The accounts of these sub-entities have been consolidated with those of the department and all inter-organizational balances and transactions have been eliminated. The investment in the Farm Credit Corporation has been recorded at cost and is not consolidated. The financial statements do not include the accounts of the Canadian Food Inspection Agency, the Canadian Wheat Board, the Canadian Grain Commission, the Canadian Dairy Commission and Farm Credit Canada because they are not under the control of Agriculture and Agri-Food Canada and therefore, are not consolidated.
3. Net Cash Provided by Government - The department operates within the Consolidated Revenue Fund (CRF), which is administered by the Receiver General for Canada. All cash received by the department is deposited to the CRF and all cash disbursements made by the department are paid from the CRF. The net cash provided by Government is the difference between all cash receipts and all cash disbursements including transactions between departments of the federal government.
4. Change in net position in the Consolidated Revenue Fund is the difference between the net cash provided by Government and appropriations used in a year, excluding the amount of non respendable revenue recorded by the department. It results from timing differences between when a transaction affects appropriations and when it is processed through the CRF.
5. Revenues:
   1. Revenues from regulatory fees are recognized in the accounts based on the services provided in the year.
   2. Funds received from external parties for specified purposes are recorded upon receipt as deferred revenues. These revenues are recognized in the period in which the related expenses are incurred.
   3. Other revenues are accounted for in the period in which the underlying transaction or event occurred that gave rise to the revenues.
   4. Dividends are recorded as income in the period when they are received.
   5. Refunds prior year expenses are recorded in the period when they are received.
   6. Interest revenue is recognized when earned. Interest revenue ceases to be accrued when either principal or interest is not reasonably collectable.
6. Expenses - Expenses are recorded on the accrual basis:
   1. Grants are recognized in the year in which the conditions for payment are met. In the case of grants which do not form part of an existing program, the expense is recognized when the Government announces a decision to make a non-recurring transfer, provided the enabling legislation or authorization for payment receives parliamentary approval prior to the completion of the financial statements.
   2. Contributions are recognized in the year in which the recipient has met the eligibility criteria or fulfilled the terms of a contractual agreement.
   3. Vacation pay and compensatory leave are expensed as the benefits accrue to employees under their respective terms of employment.
   4. Services received without charge from other government departments for accommodation, employer's contribution to the health and dental insurance plans, legal services, and provincial workers compensation plan contributions are recorded as operating expenses at their estimated cost. A corresponding amount is credited directly to the Equity of Canada.
7. Employee future benefits
   1. Pension benefits - The department's eligible employees participate in the Public Service Pension Plan, a multiemployer plan administered by the Government of Canada. Both the employees and the department contribute to the cost of the Plan. The department's contributions are expensed during the year in which the services are rendered and represent the total pension obligation of the department. The department is not required under present legislation to make contributions with respect to any actuarial deficiencies of the Public Service Pension Plan.
   2. Severance benefits - Eligible employees are entitled to severance benefits, as provided for under labor contracts and conditions of employment. The cost of these benefits is accrued as employees render the services necessary to earn them. These costs are calculated using information derived from the results of the actuarially-determined liability for employee severance benefits for the Government as a whole. Employee severance benefits on cessation of employment represent obligations of the department that are normally funded through parliamentary appropriations when the benefits are paid.
   3. Other future benefit plans - The federal government sponsors a variety of other future benefit plans from which employees and former employees can benefit during or after employment or upon retirement. The Public Service Health Care Plan and the Pensioners' Dental Service Plan represent the two major future benefit plans available to the department's employees. The department does not pay for these programs as they fall under the federal government's financial responsibilities, but the department records its share of the annual benefits paid under these programs as a service received without charge from other government departments. No amount is recorded in the department's financial statements with regard to the actuarial liability of these programs at year end.
8. Accounts Receivable - Accounts receivable are stated at amounts expected to be ultimately realized; an allowance is made for receivables where recovery is considered uncertain.
9. Loans and advances - Loans and advances are recorded at amounts expected to be ultimately realized; an allowance is made where recovery is considered uncertain.
10. The department has conditionally repayable contributions. These are contributions that, all or part of which become repayable, if conditions specified in the contribution agreement come into effect. Accordingly, they are not recorded on the Statement of Financial Position until such time as the conditions specified in the agreement are satisfied at which time they are then recorded as a receivable and a reduction in transfer payment expenses. An estimated allowance for un-collectability is recorded where appropriate.
11. Contingent liabilities - Contingent liabilities are potential liabilities which may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense recorded. If the likelihood is not determinable or an amount cannot be reasonably estimated, the contingency is disclosed in the notes to the financial statements.
12. Loan and Price Guarantees - An allowance on loans or price guarantees is recorded in the accounts when it is likely that a payment will be made to honor a guarantee and where the amount of the anticipated loss can be reasonably estimated. The amount of the allowance for losses is determined based on historical loss experience and economic conditions adversely affecting the capacity of borrowers to reimburse the loan. The allowance is reviewed on a regular basis and the variations are recorded in the statement of operations.
13. Environmental liabilities - Environmental liabilities reflect the estimated costs related to the management and remediation of environmentally contaminated sites. Based on management's best estimates, a liability is accrued and an expense recorded when the contamination occurs or when the department becomes aware of the contamination and is obligated, or is likely to be obligated to incur such costs. If the likelihood of the department's obligation to incur these costs is not determinable, or if an amount cannot be reasonably estimated, the costs are disclosed as contingent liabilities in the notes to the financial statements.
14. Tangible capital assets and leasehold improvements - Tangible capital assets and leasehold improvements having an initial cost of $10,000 or more are recorded at historical cost or management's estimated historical cost less accumulated amortization. Amortization is provided on a straight-line basis over the estimated useful life of the asset as follows:
    

    Asset class	Amortization period
    Buildings	20 to 30 years
    Works and infrastructure	15 to 40 years
    Machinery and equipment	3 to 20 years
    Vehicles	3 to 10 years
    Assets under construction	Once in service, in accordance with asset type
    Leasehold improvements	Lesser of the remaining term of the lease or useful life of the improvement

    
    

    Software and leasehold improvements costs have been capitalized prospectively since April 1, 2001. Any costs incurred previously have been expensed.

15. Measurement uncertainty - The preparation of these financial statements in accordance with Treasury Board accounting policies, which are consistent with Canadian generally accepted accounting principles for the public sector, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses reported in the financial statements. At the time of preparation of these statements, management believes the estimates and assumptions to be reasonable. The most significant items where estimates are used are: contingent liabilities, allowance for loan guarantees, environmental liabilities, the liability for employee severance benefits and the useful life of tangible capital assets. Actual results could significantly differ from those estimated. Management's estimates are reviewed periodically and, as adjustments become necessary, they are recorded in the financial statements in the year they become known.

3. Parliamentary appropriations

The Department receives most of its funding through annual Parliamentary appropriations. Items recognized in the Statement of Operations and the Statement of Financial Position in one year may be funded through Parliamentary appropriations in prior, current or future years. Accordingly, the Department has different net results of operations for the year on a government funding basis than on an accrual accounting basis. The differences are reconciled in the following tables:

(a) Reconciliation of net cost of operations to current year appropriations used

	2008	2007
Net cost of operations	$2,956,619	$3,903,382
Adjustments for items affecting net cost of operations but not affecting appropriations
Add (less):
Services received without charge	(48,237)	(57,905)
Crop Re-insurance Fund revenues	87,838	65,943
Refunds of previous years expenditures	970	521
Reversal of opening accrued liabilities	16,172	47,414
Revenue not available for spending	26,197	26,544
Cost of Production Benefit program accrual	400,000	(400,000)
Amortization of tangible capital assets	(41,435)	(37,509)
Expenses related to loan guarantees	7,330	(13,691)
Reversal of expenditures related to the Department of Justice	-	(1,900)
Other	(420)	(9,031)
	3,405,034	3,523,768
Adjustments for items not affecting net cost of operations but affecting appropriations
Add (less) :
Acquisitions of tangible capital assets	31,858	45,145
Prepaid expenses and inventory purchased	1,936	(1,191)
Current year appropriations used	$3,438,828	$3,567,722

(b) Appropriations provided and used

	2008	2007
Vote 1 - Operating expenditures	$725,306	$754,091
Vote 5 - Capital expenditures	52,775	51,211
Vote 10 - Transfer payments	649,970	832,761
Statutory amounts	2,113,065	2,232,296
Less:
Appropriations available for future years	4,585	3,563
Lapsed appropriations	97,703	299,074
Current year appropriations used	$3,438,828	$3,567,722

(c) Reconciliation of net cash provided by Government to current year appropriations used

	2008	2007
Net cash provided by Government	$3,547,759	$3,568,065
Revenue not available for spending	26,197	26,544
Refunds of previous years expenditures	970	521
Change in net position in the Consolidated Revenue Fund:
Variation in accounts receivable	23,479	(36,500)
Variation in loans and advances	(24,010)	73,440
Variation in accounts payable and accrued liabilities	(465,553)	445,000
Variation in deferred revenue	726	(5,354)
Variation in other liabilities	(178,708)	(210,801)
Other adjustments1	507,968	(293,193)
	(136,098)	(27,408)
Current year appropriations used	$3,438,828	$3,567,722

¹ Other adjustments reflect the cumulative difference between the changes in assets and liabilities which do not have an impact on either net cash provided by Government or Appropriations Used.

4. Expenses

	2008		2007
Grants and contributions	$	2,170,002	$	3,066,992
Operating expenses
Salaries and employee benefits		565,485		577,486
Professional and other services		151,190		151,332
Allowance for loan guarantees		57,031		53,210
Materials and supplies		46,387		63,366
Amortization of tangible capital assets		41,435		37,509
Accommodation		33,744		36,798
Travel		21,881		26,722
Repairs and maintenance		18,578		16,065
Electricity and other public services		18,307		18,779
		954,038		981,267
Other expenses
Crop Re-insurance Fund		320		-
Total expenses	$	3,124,360	$	4,048,259

5. Revenues

	2008	2007
Crop Re-insurance Fund	$88,158	$65,943
Sale of goods and services	52,613	50,082
Joint projects and cost sharing agreements	7,484	10,771
Dividends and interest - Crown corporations	7,609	8,722
Interest	8,459	6,598
Gain on disposal of assets	3,418	2,761
Total revenues	$167,741	$144,877

6. Accounts receivable

	2008	2007
Receivables from other departments and agencies	$19,585	$34,347
Receivables from external parties	95,751	102,621
	115,336	136,968
Less: Allowance for doubtful accounts on external receivables	(14,347)	(12,500)
Net receivables	$100,989	$124,468

Accounts Receivable from external parties are a result of program overpayments, payments under advance and loan guarantee programs and trade receivables.

7. Loans and advances

	2008	2007
Loans resulting from loan guarantee programs	$123,194	$115,887
Less: Allowance	(86,365)	(79,754)
	36,829	36,133
Advances to Crop Re-insurance Fund	470,855	498,475
Loans to Canadian Dairy Commission	96,901	45,957
Loans for construction of exhibition buildings	52	62
Net loans and advances	$604,637	$580,627

Loans resulting from loan guarantee programs

The department's loan receivables are the result of the exercise of loan guarantees by the initial lender under the terms of various loan guarantee programs. These loans are in default with the initial lender and due immediately to the department. Interest rates on these loans vary according to the initial terms of the loans and applicable government regulations. An allowance for doubtful accounts is recorded to reflect the loans at their net realizable value.

Crop Re-insurance Fund

The fund provides funds to participating provincial governments for costs they incur in operating various crop insurance programs. Payments are made only when indemnities exceed accumulated premium reserves due to severe crop losses. The department has advanced $470,855,000 to the fund as at March 31, 2008 ($498,475,000 in 2007) and owes the equivalent amount to the department of Finance. In fiscal year 2008, the advance was reduced by $27,620,000 ($27,620,000 in 2007). The advance to the fund is non-interest bearing and 10% of the principal is repayable annually when the Crop Re-insurance fund account balance exceeds $100,000,000.

Canadian Dairy Commission

The Canadian Dairy Commission is a Crown corporation created in 1966 through the Canadian Dairy Commission Act to provide efficient producers of milk and cream 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 dairy products of high quality.

The department provides loans to the Canadian Dairy Commission to finance its dealings in dairy products. The total amount authorized to be outstanding at any time is $120,000,000. The loans bear interest that is specified by the department of Finance for Crown corporations and range from 2.15% to 4.37% in 2008 (3.02% to 4.57% in 2007). Individual loans are repayable within one year from the date the loan is advanced.

8. Investment in a Crown corporation

	2008	2007
Farm Credit Canada	$1,208,333	$1,208,333
	$1,208,333	$1,208,333

Farm Credit Canada

Farm Credit Canada exists under the Farm Credit Canada Act, to assist Canadian farmers to establish and develop sound farm enterprises through the use of long term credit. The Government of Canada wholly owns the Corporation.

9. Tangible capital assets

	Cost
	Opening Balance	Acquisitions and adjustments	Disposals and write-offs	Closing Balance
Land	$12,772	$ 219	-	$12,991
Buildings	538,501	15,814	281	554,034
Works and infrastructure	36,144	9,837	-	45,981
Machinery and equipment	192,216	8,449	4,703	195,962
Vehicles	53,622	1,556	1,812	53,366
Assets under construction	27,476	(10,275)	90	17,111
Leasehold improvements	5,556	7,256	-	12,812
	$866,287	$32,856	$6,886	$892,257

 

	Accumulated Amortization
	Opening Balance	Acquisitions and adjustments	Disposals and write-offs	Closing Balance
Land	$-	$-	$-	$-
Buildings	323,514	19,998	272	343,240
Works and infrastructure	17,697	1,016	1	18,712
Machinery and equipment	140,887	12,645	4,499	149,033
Vehicles	33,908	3,427	1,484	35,851
Assets under construction	-	-	-	-
Leasehold improvements	2,212	4,713	-	6,925
	$518,218	$41,799	$6,256	$553,761

 

	Net book value 2008	Net book value 2007
Land	$12,991	$12,772
Buildings	210,794	214,987
Works and infrastructure	27,269	18,447
Machinery and equipment	46,929	51,329
Vehicles	17,515	19,714
Assets under constructiond	17,111	27,476
Leasehold improvements	5,887	3,344
	$338,496	$348,069

10. Accounts payable and accrued liabilities

	2008	2007
Accounts payable and accrued liabilities external to government	$1,902,104	$2,337,899
Due to department of Finance for Crop Re-insurance Fund	470,855	498,475
Due to other departments and agencies	8,146	10,429
Environmental Liabilities	1,925	1,780
	$2,383,030	$2,848,583

11. Deferred Revenue

Deferred revenue represents the balance at year-end of unearned revenue stemming mainly from joint collaborative agreements and cost-sharing agreements. Revenue is recognized each year in the amount of the actual costs incurred. Details of the transactions to this account are as follows:

	2008	2007
Balance - beginning of year	$11,912	$17,266
Funds received	8,210	5,417
Revenue recognized	(7,484)	(10,771)
Balance - end of year	$12,638	$11,912

12. Employee future benefits

1. Pension benefits - The department's employees participate in the Public Service Pension Plan, which is sponsored and administered by the Government of Canada. Pension benefits accrue up to a maximum period of 35 years at a rate of 2 percent per year of pensionable service, times the average of the best five consecutive years of earnings. The benefits are integrated with Canada/Québec Pension Plans benefits and they are indexed to inflation.

   Both the employees and the department contribute to the cost of the Plan. The 2008 expense amounts to $54,907,000 ($54,980,000 in 2007), which represents approximately 2.1 times (2.2 times in 2007) the employee contributions.

   The department's responsibility with regard to the Plan is limited to its contributions. Actuarial surpluses or deficiencies are recognized in the financial statements of the Government of Canada, as the Plan's sponsor.

2. Severance benefits - The department provides severance benefits to its employees based on eligibility, years of service and final salary. These severance benefits are not pre-funded. Benefits will be paid from future appropriations. Information about the severance benefits, measured as at March 31, is as follows:
   

   	2008	2007
   Accrued benefit obligation, beginning of year	$96,878	$92,316
   Expense for the year	5,257	10,633
   Benefits paid during the year	(6,837)	(6,071)
   Accrued benefit obligation, end of year	$95,298	$96,878

   
   

13. Other liabilities

The department holds funds in trust from the AgriInvest program, Net Income Stabilization Account program (NISA), and the Canadian Agriculture Income Stabilization program (CAIS) as well as security deposits.

The CAIS program helps producers protect their farming operations against drops in income. Program payments are shared 60% federally and 40% provincially/territorially. The provincial/territorial share of the contributions and interest paid on the contributions are held in a specified purpose account until the producers draw down their funds.

The NISA program was established by section 15 of the Farm Income Protection Act and the Federal/Provincial/ Territorial Agreement to help producers improve long term income stability. Participants deposit funds into an account held at a participating financial institutions and receive matching contributions from the federal and provincial/territorial governments. The NISA account balance represents the federal and provincial/territorial contributions to the program. Deposits to the fund ended in 2002 when the program was replaced by the CAIS program. NISA participants must withdraw funds at a minimum annual rate of 20% of the remaining balance and over a maximum of five years beginning April 1, 2004 and ending March 31, 2009.

Starting in 2007, the AgriInvest is a producer savings account program that replaces the coverage for smaller income declines that was provided by previous programs. Program payments are cost-shared with the province or territory. The AgriInvest account balance represents the federal and provincial/territorial contributions to the program that producers can withdraw under specific terms and conditions.

AgriInvest, CAIS, NISA and security deposit account activity during the year was as follows:

	2008	2007
Opening balance	$495,186	$705,987
Deposits	283,022	396,637
Withdrawals	(461,730)	(607,438)
Ending balance	$316,478	$495,186

14. Contingencies

1. Contaminated sites

   Liabilities are accrued to record the estimated costs related to the management and remediation of contaminated sites where the department is obligated or likely to be obligated to incur such costs. In 2008, the department has identified approximately 93 sites (82 sites in 2007) where such action is possible and for which a liability of $1,925,334 ($1,779,574 in 2007) has been recorded. The department has estimated additional clean-up costs of $2,358,301 in 2008 ($2,233,505 in 2007) that are not accrued, as these are not considered likely to be incurred at this time. The department's ongoing efforts to assess contaminated sites may result in additional environmental liabilities related to newly identified sites, or changes in the assessments or intended use of existing sites. These liabilities will be accrued by the department in the year in which they become known.

2. Claims and litigation

   Claims have been made against the department in the normal course of operations. Some of these potential liabilities may become actual liabilities when one or more future events occur or fail to occur. To the extent that the future event is likely to occur or fail to occur, and a reasonable estimate of the loss can be made, an estimated liability is accrued and an expense is recorded in the financial statements.

3. Loan or price guarantees
   

   		Outstanding guarantees		Allowance as at March 31
   	Authorized Limit	2008	2007	2008	2007
   Loans according to the Advance Payments Program under the Agricultural Marketing Programs Act	$5,000,000	$611,509	$276,386	$11,784	$18,947
   Loans to farmers under the Farm Improvement Loans Act and Farm Improvement and Marketing Cooperatives Loans Act	3,000,000	128,999	140,785	1,290	1,408
   Price guarantee agreements with marketing agencies pursuant to the Price Pooling Program under the Agricultural Marketing Programs Act	No limit	8,764	27,249	Nil	Nil
   Loans under the Spring Credit Advance Program	1,500,000	Nil	748	Nil	Nil
   Loans under the Enhanced Spring Credit Advance Program	1,500,000	10,518	604,432	3,471	7,979
   		$759,790	$1,049,600	$16,545	$28,334

   
   
4. The allowance for losses is the amount recorded for estimated losses on outstanding loan guarantees and which is included in accrued liabilities. No allowance has been recorded for the Spring Credit Advance Program and the Price Pooling Program of the Agricultural Marketing Programs Act as no costs are likely to occur.
5. Under the Advance Payments Program of Agricultural Marketing Programs Act and Spring Credit Advance Program, the department guarantees the repayment of advances made by producer organizations to farmers in the spring and in the fall, respectively, creating a more stable business environment. In 2006, the Spring Credit Advance Program and the Advance Payment Program were merged into a single program which is the new Advance Payment Program. The maximum cash advance of the new Advance Payment Program is $400,000. The loans have a repayment term of no more than 18 months.
6. Under the Price Pooling Program of the Agricultural Marketing Programs Act, the department provides a price guarantee that protects marketing agencies and producers against unanticipated declines in the market price of their products.
7. Under the Farm Improvement Loans Act and Farm Improvement and Marketing Co-operatives Loans Act, the department guarantees loans by financial institutions to farmers for improvement and development of farms, and the processing, distribution or marketing of farm products. This program guarantees 95 percent of the value of loans provided to farms and co-operatives by financial institutions. For individual applicants, including corporations, the maximum amount for a Farm Improvement and Marketing Co-operatives Loans Act loan is $250,000. The loans are repayable within fifteen years.
8. Under the Enhanced Spring Credit Advance Program of the Agricultural Marketing Programs Act, the department helps producers manage the cash crunch of planting a spring crop by providing loan guarantees that facilitate access to short-term credit. The maximum principal guarantee per individual producer or farm unit cannot exceed $100,000. The loans are repayable on or before September 30th of the crop year.
9. Conditionally Repayable Contributions

   Under the Ruminant Slaughter Loan Loss Reserve Program, conditionally repayable contributions have been issued for a total amount of $24,920,000 and ended in 2007. The funds contributed and accumulated interest are repayable within 10 years and no later than December 31, 2017, net of the amounts used to cover a portion of the loan defaults. The amounts that will become repayable cannot be currently estimated. The contributions bear interest rates either at the cost of capital of the lender or at the Government of Canada 90-day bond rate, as per initial agreements with the lender.

10. Contingent Recoveries

    CAIS is a federal and provincial/territorial cost shared program and CAIS Inventory Transition Initiative (CITI) is a federal funded program. When provincial governments deliver these programs and overpayments occur, the federal government is entitled to recover its share of funding if and when overpayments are recovered. The department has estimated the contingent recoverable amount as $8,569,000 in 2008 ($26,500,000 in 2007). Contingent recoveries are not recorded in the financial statements.

15. Contractual obligations

The nature of the department's activities can result in some large multi-year contracts and obligations whereby the department will be obligated to make future payments. Significant contractual obligations that can be reasonably estimated are summarized as follows:

	2009	2010	2011	2012	2013 and thereafter	Total
Transfer payments	$ 10,000	10,000	10,000	8,000	-	$ 38,000
	$ 10,000	10,000	10,000	8,000	-	$ 38,000

16. Related party transactions

The department is related as a result of common ownership to all Government of Canada departments, agencies, and Crown corporations. The department enters into transactions with these entities in the normal course of business and on normal trade terms. Also, during the year, the department received services which were obtained without charge from other Government departments.

Services received without charge

During the year the department received without charge from other departments, accommodation, employer's contribution to the health and dental insurance plans, legal fees and provincial workers compensation plan contributions. These services without charge have been recognized in the department's Statement of Operations as follows:

	2008	2007
Employer's contribution to the health and dental insurance plans	$30,930	$34,925
Accommodation	14,066	19,666
Provincial workers compensation plan contributions	1,485	1,731
Legal services	1,756	1,583
	$48,237	$57,905

The Government has structured some of its administrative activities for efficiency and cost-effectiveness purposes so that one department performs these on behalf of all without charge. The costs of these services, which include payroll and cheque issuance services provided by Public Works and Government Services Canada, are not included as an expense in the department's Statement of Operations.

17. Equity of Canada

The Department operates two programs which under legislation require that the revenues be earmarked to offset the expenses of the program.

	2008	2007
Restricted equity
Crop Re-insurance Fund	$(253,155)	$(340,992)
Agricultural Commodities Stabilization Accounts	647	647
	(252,508)	(340,345)
Unrestricted equity	(348,424)	(899,964)
Equity of Canada	$(600,932)	$(1,240,309)

1. Crop Re-insurance Fund: Under the Farm Income Protection Act, this program provides insurance to participating provinces for costs they incur in operating crop insurance programs. The fund records receipts and disbursements under the terms of reinsurance agreements. When there is insufficient revenues to meet payments, the Minister of Finance may authorize an advance of additional funds to cover these obligations (Note 7).
2. Agricultural Commodities Stabilization Accounts: The Agricultural Stabilization Act, under which the commodity accounts formerly operated, has been repealed and replaced by the Farm Income Protection Act effective April 1, 1991. The purpose of these accounts was to reduce income loss to producers from market risks through stabilizing prices. Premiums were shared equally by the Government of Canada, the governments of participating provinces and participating producers. Current activities are limited to collection of accounts receivable.

The department includes in its revenues and expenses transactions for the Crop Re-insurance Fund and for the Agricultural Commodities Stabilization Account. The Farm Income Protection Act and the Agricultural Stabilization Act require that the net balances in these accounts be segregated from the Consolidated Revenue Fund.

	Crop Re-insurance Fund	Agricultural Commodities Stabilization Account
Opening balance, April 1, 2007	$(340,992)	$647
Revenues	88,157	-
Expenses	(320)	-
Ending balance, March 31, 2008	$(253,155)	$647

18. Comparative information

Comparative figures have been reclassified to conform to the current year's presentation.

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