Quarterly Financial Report for the quarter ended June 30, 2021

Agriculture and Agri-Food Canada - Quarterly Financial Report for the quarter ending June 30, 2021 (PDF, 120 KB)

Introduction

Agriculture and Agri-Food Canada (AAFC) is the federal department responsible for the Canadian agriculture and agri-food sector. Agriculture is a shared jurisdiction in Canada, and our department works closely with provincial and territorial governments on the development and delivery of policies and programs. Along with these policies and programs, our research and technology helps farmers, food producers, and processors grow and develop the sector in order to succeed in Canadian and global markets.

Detailed information on Agriculture and Agri-Food Canada’s program activities can be found in the Departmental Plan.

This quarterly financial report has been prepared as required by section 65.1 of the Financial Administration Act in the form and manner prescribed by Treasury Board, and should be read in conjunction with AAFC’s 2021-2022 Main Estimates and Supplementary Estimates (A).

This report has not been subject to an external audit or review.

Basis of presentation

This quarterly report has been prepared using an expenditure basis of accounting. The accompanying statement of authorities includes the Department's spending authorities granted by Parliament, and those used by the Department consistent with the 2021-2022 Main Estimates, as well as the Supplementary Estimates (A) available for use during the 2021-2022 fiscal year. This quarterly report has been prepared using a special-purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

The authority of Parliament is required before money can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts, or through legislation in the form of statutory spending authority for specific purposes.

The Department uses the full accrual method of accounting to prepare and present its annual departmental financial statements that are part of the departmental performance reporting process. However, the spending authorities voted by Parliament remain on an expenditure basis.

Highlights of fiscal quarter and fiscal year-to-date results

This quarterly financial report reflects the results of the current fiscal period in comparison to the authorities approved by Parliament, as well as budget adjustments approved by Treasury Board up to June 30, 2021.

The following table provides a comparison of total authorities available for use and year-to-date expenditures for the first quarter of the current and previous fiscal years.

Comparison of total authorities available for use and total year-to-date expenditures for the quarter ended June 30 of fiscal years 2021-2022 and 2020-2021
All votes and statutory authorities
(in millions of dollars)
2021-2022 2020-2021
Total authorities available for use 3,307 2,605
Total year-to-date expenditures 211 284
Utilization 6% 11%

A. Significant changes to authorities

The following table provides a comparison of authorities by Vote for the first quarter of the current and previous fiscal years.

Comparison of total authorities as of June 30 of fiscal years 2021-2022 and 2020-2021
Total authorities available for use
(in millions of dollars)
2021-2022 2020-2021 Variance
Vote 1 – Net operating authorities 621 425 195
Vote 5 – Capital authorities 50 30 20
Vote 10 – Grants and contributions 667 431 236
Statutory authorities 1,969 1,719 250
Total authorities 3,307 2,605 702
Note: Totals may not add up due to rounding.

Total authorities in fiscal year 2021-2022 were $3,307 million at the end of the first quarter, as compared to $2,605 million at the end of the first quarter of 2020-2021, which represents an increase of $702 million or 27%. This increase is primarily attributable to the following:

  • There was an increase of $195 million in authorities available for use due to receiving Full Supply of Main Estimates and Supplementary Estimates (A) this quarter compared to the reduced Supply received in the first quarter of 2020-21. The reduced supply in the first quarter of 2020-21 was a result of the COVID-19 pandemic and limited sessions in the spring for Parliament to study Supply. The standing orders of the House of Commons were amended to extend the study period into the Fall of 2020. The increase includes the following components:
    • a $149-million increase in Vote 1 – Net Operating authorities;
    • a $10-million increase in Vote 5 – Capital authorities; and
    • a $36-million increase in Vote 10 – Grants and contributions.
  • The statutory authorities increase of $250 million is mainly due to $469 million in funding for the Dairy Direct Payment Program being offset by a $237.5 million reduction due to the expiry of the statutory COVID-19 funding under the Public Health Events of National Concern Payments Act.
  • The $236 million increase in Vote 10 – Grants and contributions is mainly attributable to the following COVID-19 pandemic initiatives: $140 million in funding to continue supporting food security of Canadians during and beyond the pandemic and $54 million to extend the Mandatory Isolation Support for Temporary Foreign Workers Program. Other increases are mainly due to the $36 million increase from the timing difference in Supply.
  • The $195 million increase in Vote 1 – Net Operating authorities is primarily attributable to the $149 million increase from the timing difference in Supply. The remaining increase is mostly due to a $20 million Vote 1 to Vote 10 transfer in the first quarter of 2020-21 as well as additional funding of $13 million this year for collective bargaining obligations.
  • The $20 million increase in Vote 5 – Capital authorities is attributable to the $10 million proceeds from the sale of AAFC’s Regina Research Farm as well as $10 million due to the timing difference in Supply.

B. Significant changes in year-to-date expenditures

The following table provides spending comparisons by Vote for the first quarter of the current and previous fiscal years.

Comparison of year-to-date expenditures for the quarter ended June 30 of fiscal years 2021-2022 and 2020-2021
Year-to-date expenditures
(in millions of dollars)
2021-2022 2020-2021 Variance
Vote 1 - Net Operating expenditures 139 132 7
Vote 5 - Capital expenditures 5 2 3
Vote 10 - Grants and Contributions expenditures 15 22 (6)
Budgetary statutory expenditures 52 128 (76)
Total Net Budgetary Expenditures 211 284 (73)
Note: Totals may not add up due to rounding.

At the end of the first quarter of 2021-2022, total expenditures were $211 million, compared to $284 million reported for the same period in 2020-2021, representing a decrease of $73 million or 26%. The decrease is primarily attributable to the following:

  • a $76-million decrease in statutory expenditures mainly due to a $90 million reduction in COVID-19 program spending as a result of the expiry of the statutory COVID-19 funding. This decrease is partially offset by increases of $13 million in AgriInvest grant payments due to an increase in the number of applications being processed, and $12 million in AgriInsurance contribution payments as a result of timing, frequency and materiality of claims received and released.
  • a $6-million decrease in Vote 10 – Grants and Contributions due to the timing of claim submissions for several Canadian Agricultural Partnership programs and lower funding authority limiting spending for the Dairy Farm Investment Program.

These decreases are partially offset by the following increases:

  • a $7-million increase in Vote 1 – Operating expenditures primarily due to increased salary costs associated with higher wage rates and the hiring of new employees.
  • a $3-million increase in in Vote 5 – Capital expenditures primarily due to increased spending on fleet procurement and facility upgrades.

Risks and uncertainties

Agriculture and Agri-Food Canada continues to exercise prudent management in delivering its policies and programs. The Department has established processes to identify, assess, monitor, and respond to a variety of risks to facilitate decision making and priority setting, and to contribute to more effective delivery and efficient use of resources.

In today’s environment, uncertainties brought on by the COVID-19 pandemic have required unprecedented measures, programs, and some reprioritization of activities to mitigate related impacts on the sector and the Department. The third wave of the pandemic provided further evidence that risks and impacts on AAFC’s operating environment would be longer lasting than originally perceived.  As a result, AAFC is presently leveraging this perspective to inform planning in the context of longer pandemic impacts.

Significant changes in relation to operations, personnel, and programs

Personnel

On June 21, 2021 Marie-Claude Guérard was appointed as the Chief Financial Officer and Assistant Deputy Minister of the Corporate Management Branch.

Programs

The following announcements of new programs or changes to existing programs were in response to the effects of the COVID-19 pandemic on the Canadian agriculture sector:

  • Mandatory Isolation Support for Temporary Foreign Workers Program: An additional $57.6 million was announced in Budget 2021 to extend the program until August 31, 2021. The program assists employers with the incremental costs associated with the 14-day isolation period as well as up to three day hotel quarantine.
  • Supporting the Food Security of Canada’s Most Vulnerable: Budget 2021 announced an additional $140 million for Agriculture and Agri-Food Canada in 2021-22 to support the on-the-ground work of organizations and communities addressing unprecedented food security challenges, particularly for those among Indigenous, remote, and other communities most at-risk of food insecurity.

The following are announcements of new programs or changes to existing programs which were not directly in response to the COVID-19 pandemic:

  • Youth Employment Skills Strategy: An additional $21.4 million was allocated to Agriculture and Agri-Food Canada in 2021-22 to fund up to 1,400 new positions for youth in the agriculture industry to help them increase their work experience and learn new skills.
  • Dairy Direct Payment Program: Funding of $944 million is being provided over two years starting in 2021-22 to extend the program to compensate dairy farmers in response to trade agreements including the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
  • Poultry and Egg On-Farm Investment Program: Funding of $704 million is being provided over 10 years starting in 2021-22. The Poultry and Egg On-Farm Investment Program (PEFIP) aims to help supply-managed poultry and egg producers adapt to market changes resulting from the implementation of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).
  • AgriStability for 2020 and 2021 (important changes): Changes are being made to the AgriStability program regarding the Reference Margin Limit (RML) which will be removed retroactively for the 2020 program year, and the deadline to enroll in the 2021 program year will be extended. The estimated costs for RML removal will be $113.2 million in 2021-22 and $56.6 million in 2022-23.

Approval by Senior Officials
Approved by:

Original signed by
Chris Forbes, Deputy Head
Ottawa, Canada

Original signed by
Marie-Claude Guérard, Chief Financial Officer
Ottawa, Canada

Statement of Authorities (unaudited)
For the quarter ended June 30, 2021
(in thousands of dollars)
  Fiscal year 2021-2022 (1) Fiscal year 2020-2021 (1)
  Total available for use for the year ending March 31, 2022 (2) Used during the quarter ended June 30, 2021 Year to date used  at quarter-end Total available for use for the year ending March 31, 2021 (2) Used during the quarter ended June 30, 2020 Year to date used at quarter-end
Vote 1 - Net Operating expenditures $ 620,752 $ 139,349 $ 139,349 $ 425,372 $ 132,236 $ 132,236
Vote  5 - Capital expenditures 50,079 4,590 4,590 29,948 1,983 1,983
Vote 10 - Grants and contributions 666,732 15,075 15,075 430,737 21,503 21,503
Budgetary statutory authorities (3) 1,969,398 51,644 51,644 1,719,152 127,972 127,972
Total Budgetary authorities 3,306,962 210,657 210,657 2,605,208 283,694 283,694
Total authorities $3,306,962 $210,657 $210,657 $2,605,208 $283,694 $283,694

Note:

(1) Totals may not add due to rounding.

(2) Includes only Authorities available for use and granted by Parliament at quarter-end.

(3) Details on Budgetary statutory authorities are included in Appendix A.

Departmental Budgetary Expenditures by Standard Object (unaudited)
For the quarter ended June 30, 2021
(in thousands of dollars)
  Fiscal year 2021-2022 (1) Fiscal year 2020-2021 (1)
Planned expenditures for the year ending March 31, 2022 Expended during the quarter ended June 30, 2021 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended June 30, 2020 Year to date used at quarter-end
Expenditures:
Personnel $530,104 $136,719 $136,719 $399,439 $128,343 $128,343
Transportation and communications 13,741 600 600 8,664 285 285
Information 10,786 654 654 5,671 587 587
Professional and special services 112,976 16,108 16,108 62,233 11,905 11,905
Rentals 8,982 2,812 2,812 4,353 2,532 2,532
Repair and maintenance 13,372 1,353 1,353 8,203 813 813
Utilities, materials and supplies 42,332 5,017 5,017 27,682 3,656 3,656
Acquisition of land, buildings and works 16,659 634 634 17,881 221 221
Acquisition of machinery and equipment 43,826 3,568 3,568 34,940 1,086 1,086
Transfer payments 2,561,267 49,729 49,729 2,076,871 132,749 132,749
Other subsidies and payments 8,682 495 495 4,881 4,610 4,610
Total gross budgetary expenditures 3,362,727 217,688 217,688 2,650,821 286,787 286,787
Less Revenues netted against expenditures:
Vote-netted revenues 55,766 7,031 7,031 45,612 3,093 3,093
Total Revenues netted against expenditures 55,766 7,031 7,031 45,612 3,093 3,093
Total net budgetary expenditures  $3,306,962  $210,657  $210,657  $2,605,208  $283,694  $283,694

Note:

(1) Totals may not add due to rounding.

Appendix A

Budgetary Statutory Authorities Breakdown (unaudited)
For the quarter ended June 30, 2021

(in thousands of dollars)
  Fiscal year 2021-2022 (1) Fiscal year 2020-2021 (1)
Planned expenditures for the year ending March 31, 2022 Expended during the quarter ended June 30, 2021 Year to date used at quarter-end Planned expenditures for the year ending March 31, 2021 Expended during the quarter ended June 30, 2020 Year to date used at quarter-end
Contributions to employee benefit plans $68,728 $16,661 $16,661 $65,215 $16,304 $16,304
Minister of Agriculture and Agri-Food - Salary and motor car allowance 91 23 23 89 22 22
Contribution payments for the AgriStability program 387,230 (11,170) (11,170) 384,830 (5,991) (5,991)
Contribution payments for the AgriInsurance program 623,000 19,054 19,054 623,000 7,333 7,333
Grant payments for the AgriInvest program 122,910 33,804 33,804 122,910 20,334 20,334
Payments in connection with the Agricultural Marketing Programs Act 104,800 4,617 4,617 90,300 1,453 1,453
Grant payments for the AgriStability program 39,320 252 252 39,320 292 292
Contribution payments for the AgriInvest program 16,550 - - 16,550 3,333 3,333
Loan guarantees under the Canadian Agricultural Loans Act 13,111 228 228 13,111 (76) (76)
Canadian Cattlemen's Association Legacy Fund - - - - - -
Contributions in support of the Assistance to the Pork Industry Initiative - (12,084) (12,084) - (5,033) (5,033)
Grants to agencies established under the Farm Products Agencies Act 100 - - 100 - -
Contribution payments for the Agricultural Disaster Relief  Program (ADRP)/AgriRecovery 118,513 (47) (47) 118,513 - -
Canadian Pari-Mutuel Agency Revolving Fund - (734) (734) - (56) (56)
Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets 6,046 1,013 1,013 7,713 455 455
Refunds of amounts credited to revenues in previous years - 27 27 - 1 1
Grant payments for the Canadian Agricultural Income Stabilization program Inventory Transition Initiative - (1) (1) - (2) (2)
Contribution payments for the Canadian Agricultural Income Stabilization program Inventory Transition Initiative - - - - (6) (6)
Grant Payments Related to the Dairy Direct Payment Program 469,000 - - - 70,400 70,400
Contribution payments for the Local Food Infrastructure Program - - - 75,000 208 208
Contribution payments for the Mandatory Isolation Support for Temporary Foreign Worker program - - - 50,000 19,000 19,000
Contribution payments for the Emergency Processing Fund program - - - 62,500 - -
Contribution payments for the Surplus Food Purchase program - - - 50,000 - -
Budgetary statutory authorities $1,969,398 $51,644 $51,644 $1,719,152 $127,972 $127,972

Note:

(1) Totals may not add due to rounding.