Agricultural Sciences, 2015, 6, 961-969 Published Online September 2015 in SciRes. http://www.scirp.org/journal/as http://dx.doi.org/10.4236/as.2015.69093 How to cite this paper: Dale, A. and Currie, E. (2015) An Alternative Funding Model for Agribusiness Research in Canada. Agricultural Sciences, 6, 961-969. http://dx.doi.org/10.4236/as.2015.69093 An Alternative Funding Model for Agribusiness Research in Canada Adam Dale 1 , Elliott Currie 2 1 Department of Plant Agriculture, University of Guelph, Simcoe Research Station, Simcoe, Canada 2 Department of Management, University of Guelph, Guelph, Canada Email: adale@uoguelph.ca , ecurrie@uoguelph.ca Received 12 August 2015; accepted 15 September 2015; published 21 September 2015 Copyright © 2015 by authors and Scientific Research Publishing Inc. This work is licensed under the Creative Commons Attribution International License (CC BY). http://creativecommons.org/licenses/by/4.0/ 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”. Keywords Tax Credits, Index Options, Research Funding, Capital Gains, Matching Funds 1. Introduction Over the last twenty years, there has been increasingly less funding given to applied or near-market agricultural research in Ontario. In 2009 the total research and development expenditures by business enterprises in food manufacturing was tabulated by Agriculture and Agri-Food Canada at $157 million and was planned to grow to only $172 million by 2014. This reflects a growth rate of less than 2% per year, marginally matching inflation [1] [2]. Also, The Ontario Ministry of Agriculture and Food and Rural Affairs entered into a 5-year agreement with the University of Guelph to fund research. 57 million dollars was to be transferred to the university annually with no inflation factor to be applied [3]. There have been many reasons for this: governments have moved to a matching funding model, commodity prices have remained low and the agricultural industry has traditionally relied on government funding for re-