Hog farmers have been given over three extra weeks to apply for loans under the federally-backed hog industry loan loss reserve program.
And the federal government has also agreed to shoulder more of the risk for program loans in cases where the money is headed toward repayment of federal advances.
Agriculture Minister Gerry Ritz on Wednesday announced the deadline for applications has been extended to March 26, from March 1.
“Producers have told me they need more time to develop their business plans, meet with lenders, and to negotiate the best terms and rates for their operations, and we’ve listened,” Ritz said in a release.
The government, which guarantees a portion of loans approved by participating lenders under the loan loss reserve plan, will also now take 90 per cent of the risk, up from 70, on loans destined for repayment of cash paid to hog farmers under the Advance Payments Program (APP).
“This change will translate in an increase of the reserve allocated to each financial institution to cover potential loan losses,” the government said in Wednesday’s release.
Paying off APP funds owed is a first requirement for farmers entering the loan loss reserve program. A participating lender assesses each applicant for eligibility.
Some hog farmers previously wondered aloud why they should take part in the loan loss reserve program, when it means taking a loan that’s 100 per cent guaranteed by government (the APP advance) and replacing it with a loan that puts some of the risk with the lender.
Eligible hog producers must also provide business plans which show their businesses are or can be viable and have a “reasonable prospect” of repaying a loan.
The program, first announced in August last year, “is not meant to add more debt to a business, but to help producers spread their short-term debt payments over a longer period of time, thereby freeing up cash in the near term,” the government said.
The loan loss reserve program is open to individual farmers, partnerships, corporations, joint ventures, body corporates and trusts that have hog operations in Canada and aren’t already taking part in the government’s hog farm transition program.
“These changes will provide producers additional time to review their business plans,” Jurgen Preugschas, chairman of the Canadian Pork Council, said in a separate release Wednesday, “and we hope (the changes allow) financial institutions to issue additional loans under the program.”