The federal government’s low-interest loan guarantee program for Canadian farmers will sweeten the interest-free portion of its offer for the next two program years to help with farm cash flow.
Agriculture Minister Marie-Claude Bibeau on Thursday announced a temporary increase in the interest-free portion of the Advance Payments Program to $250,000, up from the usual $100,000, for the 2022 and 2023 program years.
The change will be made by way of amendments to the Agricultural Marketing Programs Regulations and will be applied to existing advances under the 2022 APP as of June 20, when the regulatory amendments came into force.
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The APP provides eligible farmers with cash advances of up to $1 million against the expected value of their commodities in a program year. Farmers repay APP advances as they sell their production, with repayment periods of up to 18 months to fully repay the advance for most commodities, and up to 24 months for cattle and bison.
APP cash advances are calculated based on up to 50 per cent of the anticipated market value of eligible agricultural products that will be produced or are in storage.
“Through the increase to the interest-free portion, eligible producers will have access to additional cash flow over the next two growing seasons,” the government said in a release.
“This year, agricultural producers are facing significant increases in input prices,” Bibeau said in the same release. “By suspending interest on the first $250,000 of their Advance Payments Program loans, we are providing relief to those women and men who work so hard to feed us and the world in these uncertain times.”
The program, which is delivered through 30 industry associations, last year distributed $2.39 billion in advances to 17,430 producers across the country.
“This change becomes effective June 20, and we’re eager to sort out the program details with the APP staff as quickly as possible so that farmers, both those who already have their 2022 cash advance along with those who will apply in 2022, can benefit from these changes,” Dave Gallant, director of finance and operations for Canadian Canola Growers Association (CCGA), one of the APP delivery agencies, said in a separate release.
“With higher input costs, rising interest rates, and continued pressure from weather impacts and supply chain challenges, many farmers will be keen to access the increased benefit soon.”
“Producers’ cash flow has been hit hard over the last year by the widespread drought conditions and now the rising costs of fuel, seed, and in crop management,” Alberta Wheat Commission chair Greg Sears, whose organization manages the FarmCash advance payments system, said in a separate release Thursday.
“Canadian producers are proud to step up and support the national and global food supply, but we need the business risk management tools in place to be able to do what we do best, the cost savings instilled by this change will ensure we are set up for success.” –– Glacier FarmMedia Network
