quarterly financial report for the quarter ended dec 31, 2016€¦ · agriculture and agri-food...

AGRICULTURE AND AGRI-FOOD CANADA

Quarterly Financial Report For the quarter ended Dec 31, 2016

AGRICULTURE AND AGRI-FOOD CANADA Quarterly Financial Report For the quarter ended December 31, 2016

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AGRICULTURE AND AGRI-FOOD CANADA

Statement outlining results, risks and significant changes in operations, personnel and programs

Introduction

Agriculture and Agri-Food Canada’s Quarterly Financial Report should be read in conjunction with the Main Estimates, Supplementary Estimates (A), Supplementary Estimates (B) as well as Budget 2016 Growing the Middle Class. This report has been prepared as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. As such, it has not been subject to an external audit or review. Detailed information on Agriculture and Agri-Food Canada’s program activities can be found in the Report on Plans and Priorities.

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 Main Estimates, Supplementary Estimates (A) and Supplementary Estimates (B) for the 2016-2017 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 monies 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.

http://www5.agr.gc.ca/eng/about-us/planning-and-reporting/reports-on-plans-and-priorities/2016-17-report-on-plans-and-priorities/?id=1455737253940


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Highlights of fiscal quarter and fiscal year to date results

Authorities Agriculture and Agri-Food Canada’s Quarterly Financial Report reflects the results of the 2016-2017 fiscal period ending December 31, 2016, for which full supply of Main Estimates and Supplementary Estimates (A) was released in June 2016 and Supplementary Estimates (B) in October 2016. At the end of the third quarter of 2016-2017, Agriculture and Agri-Food Canada had total funding available for use of $2,355.3 million as detailed in Table 1. This amount includes the 2016-2017 Main Estimates of $2,263.7 million, the 2016-2017 Supplementary Estimates (A) of $9.4 million, the 2016-2017 Supplementary Estimates (B) of $33.5 million, Operating and Capital budget Carry Forwards from 2015-2016 totalling $36.4 million, and $12.4 million related to proceeds collected from the sale of Crown assets. The net increase of $7.3 million compared to Agriculture and Agri-Food Canada’s total authorities at the same time in fiscal year 2015-2016 is mostly due to an increase in Vote 5 Capital authorities which is mostly offset by decrease in Vote 10 Grants and Contributions. Vote 1 Net Operating authorities as of December 31, 2016 totalled $569.1 million, which is comparable to the December 31, 2015 amount of $570.8 million. The decrease of $1.7 million is primarily attributed to the transfer of $14.8 million from Vote 1 Operating to Vote 5 Capital, as a result of the implementation of the government-wide common definition of the capital vote in 2016-17, offset by $8.5M related to the reinvestment of royalties and revenue received earlier in Supplementary Estimates B this year and an increase of $1.9M related to the 2016 Federal Infrastructure Initiative. Vote 5 Capital authorities at the end of the third quarter of 2016-2017 totalled $89.5 million, an increase of $39.4 million from the December 31, 2015 amount of $50.0 million. This is mainly due to an increase in funding of $23.8 million approved for the Federal Infrastructure Initiative, and the implementation of a common definition of the Capital Expenditures Vote. Vote 10 Grants and Contributions authority of $373.2 million as of December 31, 2016 reflects a net decrease of $27.0 million from $400.2 million at the same time in 2015-2016. The decrease is primarily attributed to the one-time grant authority of $55.6 million under the Canadian Wheat Board Transition Costs Program related to the commercialization of the Canadian Wheat Board which was recorded in 2015-2016. This is partially offset by an increase of $27.4 million in the Growing Forward 2 Cost shared program, which was included in Supplementary Estimates (B) this year while the corresponding amount for 2015-2016 was part of Supplementary Estimates (C), and not reflected in the 2015-16 third quarter report.


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Budgetary Statutory authorities available as at December 31, 2016 were $1,323.4 million, a net decrease of $3.5 million from the December 31, 2015 amount of $1,326.9 million. This decrease is mainly attributed to a downward adjustment of $2.8 million for contributions to Employee Benefit Plans and $0.7 million for proceeds from the disposal of crown assets. Graph 1: Comparison of Authorities Available for Use

Table 1: Authorities Available for Use (In thousands of dollars) (1)

Authorities 2016-2017 2015-2016 Variances Percent

Vote 1 - Net Operating authorities 569,134 570,850 (1,716) (0%)

Vote 5 - Capital authorities 89,475 50,037 39,438 79%

Vote 10 - Grants and Contributions authorities

373,327 400,235 (26,908) (7%)

Budgetary statutory authorities 1,323,401 1,326,947 (3,545) 0%

Total Authorities 2,355,337 2,348,068 7,269 0%

Note: (1) Totals may not add due to rounding.

0

250

500

750

1,000

1,250

1,500

Vote 1 Vote 5 Vote 10 Statutory

$ M

illio

ns

2016-2017 2015-2016


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Expenditures As detailed in Table 2, at the end of the third quarter of 2016-2017, the Department had spent $1,155.2 million, compared to $1,019.3 million for the same period in fiscal year 2015-2016. The increase of $135.9 million is mainly due to greater Budgetary Statutory expenditures and Vote 5 Capital expenditures, partially offset by lower Vote 10 Grants and Contributions expenditures. Vote 1 Net Operating expenditures at the end of the third quarter were $365.3 million, 64% of the total available for use of $569.1 million, which is slightly more than expenditures of $356.3 million or 62% of the total available for the same period last fiscal year. The increase of $9.0 million in actual expenditures from 2015-2016 is primarily due to an increase of $3.0 million in IT consultant services for PeopleSoft and SAP, an increase of $2.6 million due to timing of transfers to Statistics Canada to support various programs in the Department, a decrease in revenues of $2.5 million due to timing of the receipt of revenue under the Community Pastures Program, and a reported increase in legal service expenditures due to a change of billing methodology for payments related to the Department of Justice as well as increased litigation. Vote 5 Capital expenditures at the end of the third quarter were $42.3 million or 47% of the total available for use of $89.5 million. For the same period in 2015-2016, expenditures were $16.4 million or 33% of the budget of $50.0 million. The increase of $25.8 million in capital expenditures is mainly due to increased spending associated with the Federal Infrastructure Initiative. Vote 10 Grants and Contributions expenditures at the end of the third quarter of 2016-2017 were $120.2 million or 32% of the total available for use of $373.3 million. Previous year spending for the same period was $160.2 million or 40% of the total available for use of $400.2 million. The decrease in expenditures of $40.0 million is primarily due to the one time grant payment under the Canadian Wheat Board Transition Costs Program related to the commercialization of the Canadian Wheat Board recorded in 2015-2016. Budgetary Statutory expenditures at the end of the third quarter of 2016-2017 were $627.5 million compared to $486.4 million for the same period of the previous year. The increase from the prior year is attributed to $83 million in higher expenditures for the AgriInsurance program, $27 million for AgriInvest as the provincial claims were received earlier in the year, and $33 million in reduced recoveries under the Assistance to the Pork Industry Initiative.


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Graph 2: Comparison of Expenditures

Table 2: Expenditures (In thousands of dollars) (1)

Expenditures 2016-2017 2015-2016 Variance Percent

Vote 1 - Net Operating expenditures 365,348 356,304 9,044 3%

Vote 5 - Capital expenditures 42,250 16,433 25,817 157%

Vote 10 - Grants and Contributions expenditures

120,157 160,240 (40,083) (25%)

Budgetary statutory expenditures 627,505 486,358 141,147 29%

Total Net Budgetary Expenditures 1,155,260 1,019,335 135,925 13%


0

50

100

150

200

250

300

350

400

450

500

550

600

650

700

Vote 1 Vote 5 Vote 10 Statutory

$ M

illio

ns

2016-2017 2015-2016


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Expenditures in Comparison to Authorities At the end of the third quarter of 2016-2017, the Department had spent $1,155.3 million (49% of the total funding available for use), compared to $1,019.3 million for the same period in fiscal year 2015-2016 (43% of the authorities). Graph 3: Comparison of Total Authorities and Total Net Budgetary Expenditures as of December 31, for fiscal years 2016-2017 and 2015-2016

Table 3 presents budgetary expenditures by standard object. The main increase in expenditures between 2016-2017 and 2015-2016 by standard object is in Transfer Payments and acquisition of land, buildings and works, and professional and special services. A net increase of $102.9 million, or 17%, in Transfer Payments is primarily due to increased spending of $83.1 million for the AgriInsurance program, and reduced recoveries of $33.0 million under the Assistance to the Pork Industry Initiative. An increase of $19.5 million in Acquisition of Land, Buildings and Works is mainly due to increased spending associated with the Federal Infrastructure Initiative. An increase of $10.7 million in professional and special services is mainly due to a $5.9 million increase to support Science Agricultural Innovation, and $3.3 million to support IT related services for PeopleSoft and SAP.

49%

43%

0

500

1,000

1,500

2,000

2,500

2016-2017 2015-2016

$ M

illio

ns

Total Authorities Total Net Budgetary Expenditures


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Agriculture and Agri-Food Canada has total Revenue Spending authority of up to $59.9 million for 2016-2017. The revenue is generated from collaborative research agreements between Agriculture and Agri-Food Canada and third parties, the grazing and breeding activities of the Community Pastures Program, the administration of the AgriStability Program, as well as recoveries for costs related to Internal Support Services provided to other departments. The Department has generated $48.1 million in revenue at the end of the third quarter of 2016-2017, which is comparable to $48.3 million earned in the same period last year. Table 3: Budgetary Expenditures by Standard Object (In thousands of dollars) (1)

Expenditures 2016-2017 2015-2016 Variances Percent

Personnel 341,324 340,874 450 0%

Transportation and communications 9,315 7,936 1,379 17%

Information 3,728 2,464 1,264 51%

Professional and special services 76,071 65,361 10,710 16%

Rentals 5,591 2,030 3,561 175%

Repairs and maintenance 8,381 14,388 (6,007) (42%)

Utilities, materials and supplies 21,351 22,892 (1,541) (7%)

Acquisition of land, buildings and works 20,411 928 19,483 2099%

Acquisition of machinery and equipment 12,190 13,891 (1,701) (12%)

Transfer payments 694,279 591,421 102,858 17%

Other subsidies and payments 10,739 5,459 5,280 97%

Total Gross Budgetary Expenditures 1,203,379 1,067,644 135,735 13%

Less: Revenues netted against expenditures 48,118 48,309 (191) (0%)

Total Net Budgetary Expenditures 1,155,260 1,019,335 135,926 13%



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Risks and Uncertainties Agriculture and Agri-Food Canada continues to exercise prudent management in delivering its policies and programs. The Department systematically identifies, assesses, monitors, and responds to a variety of strategic, operational, program and project-level internal and external risks and opportunities. These activities are captured within the Department’s Program Performance Measurement and Risk Management Strategies process. The Program Performance Measurement and Risk Management Strategies require that Departments implement ongoing performance measurement, including risk and opportunity monitoring and performance information availability, to effectively support program expenditures. The Department's decision-making capacity is enhanced by effectively embedding risk and opportunity management within its culture, processes, and planning practices. Annually, Agriculture and Agri-Food Canada updates its Corporate Risk Profile to communicate the key risks and opportunities that have the potential to influence departmental priorities, resource allocation, and the achievement of Strategic Outcomes.

Significant changes in relation to operations, personnel and programs

Personnel

On October 21, 2016, the Prime Minister announced the appointment of Nada Semaan as the Associate Deputy Minister of Agriculture and Agri-Food Canada (AAFC).

On November 14, 2016, the Deputy Minister announced the appointment of France Pégeot to the position of Assistant Deputy Minister, Programs Branch, Agriculture and Agri-Food Canada (AAFC).

Programs

Budget 2016 announced support for a number of initiatives for the Department. The Government of Canada will invest $37.6 million in Agriculture and Agri-Food Canada over two years to modernize a number of AAFC research stations and laboratories in British Columbia, Alberta, Saskatchewan, Ontario, and Quebec. The 2016-2017 portion of the funding is reflected in this report.

Also, as part of Budget 2016, for which the 2016-2017 funding is expected to be brought into the Department in the last quarter of the fiscal year, AAFC will be investing $30 million over six years to accelerate the DNA analysis, data capture, and imaging of specimens from its collections of over 19 million specimens of insects, plants, fungi, bacteria and nematodes, and rare books related to these collections. The data will be integrated to improve public accessibility to AAFC collections which support research in climate change and rapid identification and prevention of threats to agriculture.


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Other highlights from the Budget 2016 include funding to support the water infrastructure devolution in Saskatchewan through the continued transfer of federally owned dams to the Government of Saskatchewan, and a one-year investment of up to $1.9 million for the Agricultural Youth Green Jobs Initiative to attract youth to green jobs within the agriculture and agri-food sector. The initiative follows through on a Government of Canada commitment made in Budget 2016 providing employment opportunities for post-secondary graduates to support the agriculture sector to implement environmentally beneficial activities. Under the initiative, support is available to fund internships both on the farm, and with organizations engaged in the agriculture and agri-food sector to help attract youth to green jobs.

Approval by Senior Officials Approved by: Original signed by

Original signed by

Andrea Lyon, Deputy Head

Ottawa, Canada

Pierre Corriveau, Chief Financial Officer

AGRICULTURE AND AGRI-FOOD CANADA Statement of Authorities (unaudited) For the quarter ended December 31, 2016 (In thousands of dollars)

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Fiscal year 2016-2017 (1)


Total available for use for the year ending March 31, 2017

(2)

Used during the quarter ended December 31, 2016

Year to date used at quarter-end

Total available for use for the year ending March 31, 2016 (2)

Used during the quarter ended December 31, 2015


Vote 1 - Net Operating expenditures $ 569,134 $ 124,163 $ 365,348 $ 570,850 $ 112,937 $ 356,304

Vote 5 - Capital expenditures 89,475 22,471 42,250 50,037 8,007 16,433

Vote 10 - Grants and contributions 373,327 61,537 120,157 400,235 54,343 160,240

Budgetary statutory authorities (3)

1,323,401 433,292 627,505 1,326,947 232,280 486,358

Total Budgetary authorities 2,355,337 641,463 1,155,260 2,348,068 407,567 1,019,335

Total authorities $ 2,355,337 $ 641,463 $ 1,155,260 $ 2,348,068 $ 407,567 $ 1,019,335

Notes: (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 the table below.

AGRICULTURE AND AGRI-FOOD CANADA Departmental budgetary expenditures by Standard Object (unaudited) For the quarter ended December 31, 2016 (In thousands of dollars)

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Planned expenditures for the year ending March 31, 2017

Expended during the quarter ended December 31, 2016



Expended during the quarter ended December 31, 2015


Expenditures:

Personnel $ 470,403 $ 110,094 $ 341,324 $ 499,259 $ 110,604 $ 340,874

Transportation and communications 12,674 3,605 9,315 11,338 2,900 7,936

Information 5,902 2,647 3,728 5,559 1,278 2,464

Professional and special services 142,385 28,472 76,071 114,845 25,007 65,361

Rentals 4,257 1,631 5,591 4,163 853 2,030

Repair and maintenance 22,634 3,642 8,381 21,105 6,257 14,388

Utilities, materials and supplies 61,217 8,253 21,351 48,914 9,165 22,892

Acquisition of land, buildings and works 10,084 9,819 20,411 3,271 345 928

Acquisition of machinery and equipment

41,160 5,805 12,190 31,316 6,798 13,891

Transfer payments 1,615,751 476,254 694,279 1,642,659 266,992 591,421

Other subsidies and payments 28,815 8,671 10,739 33,020 1,310 5,459

Total gross budgetary expenditures 2,415,283 658,892 1,203,379 2,415,448 431,509 1,067,644

Less Revenues netted against expenditures:

Vote-netted revenues 59,946 17,428 48,118 67,380 23,942 48,309

Total Revenues netted against expenditures

59,946 17,428 48,118 67,380 23,942 48,309

Total net budgetary expenditures $ 2,355,337 $ 641,463 $ 1,155,260 $ 2,348,068 $ 407,567 $ 1,019,335


AGRICULTURE AND AGRI-FOOD CANADA Budgetary Statutory Authorities Breakdown (unaudited) For the quarter ended December 31, 2016 (In thousands of dollars)

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Fiscal year 2016-2017 (1) Fiscal year 2015-2016 (1)


Expended during the quarter ended

December 31, 2016


Planned expenditures for the year ending March

31, 2016


December 31, 2015


Contributions to employee benefit plans $ 68,498 $ 17,099 $ 51,297 $ 71,293 $ 17,823 $ 53,469

Contributions to employee benefit plans (Administrative Tribunals Support Service of

Canada)

-

-

-

-

-

-

Minister of Agriculture and Agri-Food - Salary and motor car allowance

84 20 62 82 14 55

Contribution payments for the AgriStability program

219,300 (7,617) (12,229) 219,300 258 (13,536)

Contribution payments for the AgriInsurance program

640,800 364,435 450,966 640,800 171,314 367,853

Grant payments for the AgriInvest program 126,200 42,264 128,079 126,200 36,241 117,098

Payments in connection with the Agricultural Marketing Programs Act

65,900 5,541 11,717 65,900 5,561 12,719

Grant payments for the AgriStability program 41,000 679 (4,532) 41,000 (1,679) (2,855)

Contribution payments for the AgriInvest program 17,500 11,562 20,193 17,500 1,032 4,190

Loan guarantees under the Canadian Agricultural Loans Act

13,111 465 458 13,111 (14) (22)

Canadian Cattlemen's Association Legacy Fund

- - -

-

- -

Contributions in support of the Assistance to the Pork Industry Initiative

- (2,976) (20,782)

-

- (53,755)

Grants to agencies established under the Farm Products Agencies Act

100 - -

100 - -

Contribution payments for the Agricultural Disaster Relief Program (ADRP)/AgriRecovery

118,513 489 776 118,513 405 249

AGRICULTURE AND AGRI-FOOD CANADA Budgetary Statutory Authorities Breakdown (unaudited) For the quarter ended December 31, 2016 (In thousands of dollars)

13

Fiscal year 2016-2017 (1) Fiscal year 2015-2016 (1)

Planned expenditures for the year ending

March 31, 2017


December 31, 2016


Planned expenditures for the year ending

March 31, 2016


December 31, 2015


Canadian Pari-Mutuel Agency Revolving Fund

- 262

(1,159) - 107 (1,399)

Spending of Amounts Equivalent to Proceeds from Disposal of Surplus Moveable Crown Assets

12,396 1,193 3,180 13,147 1,686 3 027

Grant payments for the AgriInvest Kickstart program

- - - - - (2)

Contribution payments for the AgriInvest Kickstart program

- - - - - -

Refunds of amounts credited to revenues in previous years

-

-

3 - - 25

Contributions for agricultural risk management - Enhanced Spring Credit Advance program Business Risk

Management

-

(36)

(279)

-

(95)

(340)

Class grant payments for the Transitional Industry Support program

- (2) (5) - (1) (2)

Class grant payments for the Farm Income program

- (21) (21) -

-

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Grant payments for the Canadian Agricultural Income Stabilization program Inventory Transition Initiative

- (4) (25) - (9) (36)

Contribution payments for the Canadian Agricultural Income Stabilization program Inventory Transition

Initiative

-

(7)

(132)

-

(355)

(374)

Grants in support of the Grain and Oilseed Payment program

- (29) (35) - (8) (14)

Grants in support of the Cost of Production Benefit

-

-

(2) -

- (2)

Contribution for the Transitional Industry Support Program

(25) (25) -

-

-

Budgetary statutory authorities $ 1,323,402 $ 433,292 $ 627,505 $ 1,326,947 $ 232,280 $ 486,358


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