annual report 2011/12 - Manitoba Agricultural Services Corporation

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Table 2 - Five Year Insurance Statistics – 2011/122007/08 2008/09 2009/10 2010/11 2011/12AgriInsuranceNumber of producer contracts 9,893 9,737 9,402 9,174 8,929Insured acres (millions) 9.1 9.3 9.4 9.3 9.6Total coverage (liability) ($ millions) 1,323.9 1,789.8 1,746.6 1,757.8 1,723.2Producer premiums ($ millions) 58.9 76.6 70.9 71.2 71.2Total premiums ($ millions) 151.0 196.2 181.6 175.4 168.8Average coverage level selected (%) 75.4 75.9 76.1 76.4 77.3Number of claims paid 8,177 6,001 8,612 11,346 14,131Indemnities paid ($ millions) 72.8 60.2 148.1 210.5 326.9Income (loss) for the year ($ millions) 62.1 111.8 2.6 (64.0) (196.3)Funds retained, end of year ($ millions) 221.3 333.1 335.7 271.7 75.4Indemnities to total premium ratio (%) 48 31 82 120 194Indemnities to coverage ratio (%) 5.5 3.4 8.5 12.0 19.0Hail InsuranceNumber of producer contracts 4,468 4,757 4,504 4,320 3,937Insured acres (millions) 4.1 4.6 4.5 4.3 3.5Total coverage (liability) ($ millions) 476.8 640.5 630.3 595.9 493.1Premiums, prior to discounts ($ millions) 14.8 22.8 23.0 21.0 17.1Number of claims paid 2,448 1,919 1,440 1,553 775Indemnities paid ($ millions) 14.4 9.9 8.2 10.5 4.8Income (loss) for the year ($ millions) (2.1) 9.2 10.4 6.5 9.1Funds retained, end of year ($ millions) 31.7 40.9 51.3 57.9 67.0Indemnities to premium ratio (%) 97 43 36 50 28Indemnities to coverage ratio (%) 3.0 1.5 1.3 1.8 1.0Note: The above statistics are based on the insurance crop year and, as such, may not correspond exactly to the 2011/12 financial statements.18Manitoba Agricultural SeRVICes Corporation
LendingMASC’s lending programs give Manitoba’s agricultural producers and rural businesses reasonable access to credit. MASCprovides direct loans and guarantees loans from private sector financial institutions, thereby assisting in the creation andexpansion of operations in rural Manitoba.The Bridging Generations Initiative supports young farmers under the age of 40 by assisting in the inter-generationaltransfer of assets through flexible financing options, Young Farmer Rebates and Management Training Credits.Despite the general trend toward fewer young farmers, MASC’s involvement with this target group has increased for thethird consecutive year. In 2011/12, MASC issued 435 loans to producers under the age of 40, an increase of 49% over2010/11 and 61% over 2009/10. In dollar amounts, the total of $63.5 million in direct loans to young farmers representsa 56% increase compared to the previous year and a 93% increase relative to 2009/10. Loans to young farmersaccounted for 81% of MASC’s direct lending business.The Young Farmer Rebate (YFR) reduces the cost of borrowing in the critical start-up phase of an operation. YFRprovides an annual rebate of 2% on the first $150,000 of principal, and is available for the first five years of a loan,resulting in a lifetime maximum rebate of $15,000. In 2011/12, YFR totalled $1.5 million.Flexible financing options give young farmers a choice between 90% financing or five years of interest-only payments,allowing them the flexibility of reducing their initial down payment or easing their operation’s cash flow pressureduring its start-up phase. In 2011/12, MASC approved 118 loans for $14.5 million under the 90% financing option.Given that interest rates are currently at historical lows, the interest-only option is not attracting much attention at thistime.Young farmers can earn a Management Training Credit (MTC) of 1% of the principal amount of an eligible DirectLoan (to a maximum of $2,500) in each of the first five years of the loan. In 2011/12, young farmers earned MTCstotalling $188,000.LoansMASC provides short, intermediate and long-term financing with reasonable interest rates to eligible Manitoba agriculturalproducers and rural businesses. Clients are not penalized for prepayment, and have the flexibility of either locking in aninterest rate for the full amortization period (up to 25 years) or selecting renewable interest rates for one to five years. Asshown in Table 3, as of March 31, 2012, MASC had 4,394 outstanding loans with current balances totalling $347.1 million.Direct Loans are available for such purposes as purchasing land and buildings, constructing or renovating farm productionbuildings, purchasing breeding livestock, constructing or renovating farm homes, purchasing supply management quota, andconsolidating and refinancing debts.2011/12 Annual Report 19
Page 1: 2011/12Annual ReportLENDING AND INS
Page 4 and 5: The Honourable Philip S. Lee, C.M.,
Page 6: Chair’s MessageThere can be no do
Page 9 and 10: Corporate GovernanceMandate of the
Page 11 and 12: Strategic Plan ReviewMASC’s visio
Page 13 and 14: • Progress on MASC’s corporate-
Page 16 and 17: expected grazing period and the num
Page 18 and 19: Table 1: Summary of 2011/12 AgriIns
Page 22 and 23: Also included in this category are
Page 24 and 25: Rural Entrepreneur Assistance (REA)
Page 26 and 27: Farmland School Tax RebateSince 200
Page 28 and 29: Lake Dauphin Emergency FloodProtect
Page 30 and 31: Responsibility for Financial Statem
Page 32 and 33: Original signed by30MANITOBA AGRICU
Page 34 and 35: Statement of OperationsFor the Year
Page 36 and 37: Statement of Cash FlowsFor the Year
Page 38 and 39: (C)Claims PayableClaims payable is
Page 40 and 41: (N) Measurement UncertaintyThe prep
Page 42 and 43: 5. WILDLIFE DAMAGE COMPENSATION PRO
Page 44 and 45: of the program‘s administrative e
Page 46 and 47: Vacation pay liabilityThe amount re
Page 48 and 49: Remaining terms to maturities are a
Page 50 and 51: The Operating Credit Guarantee for
Page 52 and 53: The estimated farm loan incentives
Page 54 and 55: The Board of Directors is responsib
Page 56 and 57: 2012Scheduled Repaymentsnot Interes
Page 58 and 59: In addition to the financial protec
Page 60 and 61: Schedule 2:Schedule Of OPERATIONS A
Page 62: LENDING CORPORATE OFFICEUnit 100-15

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