Payback time

Tuesday, May 29, 2012

by SUSAN MANN

A small number of provincial farmers have government program benefit overpayments of more than $100,000 each and they plus others in the same boat but with smaller amounts will have to pay it all back within three years, according to Agricorp’s new rules.

Repaying the benefit overpayments within three years is one of two changes Agricorp is introducing to the way it handles these accounts. The other change is interest will be applied to any accounts with overpayments as of Jan. 1, 2013. Previously the Ontario government waived the interest owing on any overpayments. The interest rate will be determined quarterly by the Ontario government.

In total, 4,500 farmers have overpayment accounts totaling $30 million. That’s less than one per cent of the $3.5 billion Ontario farmers have received from the federal and provincial governments during the past 10 years, it says on Agricorp’s website.

Agricorp spokesperson Stephanie Charest says 75 per cent of the accounts with overpayments are less than $5,000 each.

In the past, farmers could repay their overpayment from future program payments and they can still do that now as long as the entire balance is eliminated within three years. They can also repay the entire amount at any time or repay any overpayment in installments. If farmers repay the full amount by Dec. 31 interest charges won’t apply.

The overpayments occurred because of incomplete program applications, processing errors, changes to farm operations and the nature of programs that provide advance payments for producers in financial distress, Agricorp says.

Mark Wales, Ontario Federation of Agriculture president, says the overpayments are from a number of programs and go back as far as the CAIS (Canadian Agricultural Income Stabilization) and the BSE programs. The CAIS program was launched in 2003 and was designed to provide funding for Canadian farmers to cushion extreme income reductions beyond their control. It was replaced by AgriStability when the five-year national Growing Forward set of programs was implemented in 2008.

Farm leaders were updated on the situation at the Agricultural Commodity Council meeting in April, he says.

“The outstanding balances have always been there,” Wales notes. “Farmers have known about them and many people have been working slowly to pay them down.”

Why is the government now pressing to collect this money? On its website, Agricorp says in the current fiscal environment the provincial government announced it’s focusing on eliminating the deficit while protecting vital services, such as health and education. “To support that effort, the government is working to recover all outstanding monies owed to the Crown.”

As for the interest charges, Agricorp says it’s normal practice to apply interest charges on debts owing to the Crown. In April’s provincial budget, the government announced it will only waive interest charges until the end of this year and interest would be applied starting in 2013.

Wales says Ontario is one of the only provinces that hasn’t charged interest on the overpayments.

As for whether this will cause some farmers hardship, Wales says the government really wants to work with people to design a repayment program that works. “When there was no interest being charged, no one got stressed out about paying them back.”

Jason Bent, Ontario federation manager of the farm policy research group, says they’ve been getting calls from concerned farmers who see this as a “recent reassessment.” But Bent says it’s not – it’s just the repayment terms that are changing.

Agricorp has been contacting customers for about a month and that will continue for several more weeks. All customers with overpayments are getting an information package with a detailed statement outlining their balance as of Dec. 31, 2011 that will explain what is owed, along with when and how the debt was incurred plus a repayment form.

Charest says “the statement will ensure producers understand what is owed.”

Deciding to not pay is not an option, Agricorp says. If a farmer doesn’t set up a repayment plan the account may be subject to the same collection processes as anyone else who owns money to the government. Even people who are no longer farming or farmers who aren’t participating in business risk management programs administered by Agricorp must repay any overpayments within three years.

Similarly, there isn’t a statute of limitations. All debts must be repaid regardless of when they were incurred, Agricorp says, noting it can only negotiate the terms of repayment within the three-year timeframe and not the total amount owing. BF