TITLE:
An Alternative Funding Model for Agribusiness Research in Canada
AUTHORS:
Adam Dale, Elliott Currie
KEYWORDS:
Tax Credits, Index Options, Research Funding, Capital Gains, Matching Funds
JOURNAL NAME:
Agricultural Sciences,
Vol.6 No.9,
September
21,
2015
ABSTRACT: Canadian governments have moved towards a matching funding model for agricultural research. Agricultural organizations can take advantage of this if Canadian Controlled Private Corporations are established to fund research through matching grants, tax credits and investments. A low risk options strategy is presented which uses index options and is a diagonal put spread where an in-the-money put is bought which expires in 1 to 2 years and out-of-the-money puts are sold which expire monthly. In summary, “A small Canadian Controlled Private Corporation can, for a $100,000 up front initial investment, generate at least $100,000 annually in research funding, in perpetuity”.