National Newswatch

Change aimed to helping farmers cope with rising expenses.

 

Ottawa–The interest-free portion of the Advance Payments Program (APP) will rise to $250,000 from the current $100,000 for the 2022 and 2023 crop years to give producers some additional cash flow to deal with higher costs, Agriculture Minister Marie-Claude Bibeau has announced.

She said the move should save farmers in the program an average of $5,500 in interest costs over the next two years. This change will represent total savings of up to $61 million over two years for approximately 11,000 producers.

“This year, agricultural producers are facing significant increases in input prices. By suspending interest on the first $250,000 of their APP 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 helps producers manage their working capital by providing cash advances of up to $1 million against the expected value of their commodities.

Crosby Devitt, CEO of Grain Farmers of Ontario, said, “It is good for the Minister to recognize the need for greater support for farmers who continue to incur debt to invest in Canada’s food system. Farmers need to see relief from high costs imposed by government including carbon taxes and tariffs.”

APP is designed to make the purchase of important inputs such as fuel, fertilizer and seed more affordable for producers, Bibeau said. “This will ensure they can maintain production until they are able to sell their products in the fall or winter. The interest savings and access to cash flow are both critical in helping Canadian producers continue to contribute to global food security.”

Canadian farmers are working to help fill the shortages of food supplies around the world, she said. “The government is committed to ensuring producers have the resources they need to protect Canada’s food systems and maximize their contribution to global food supplies.

APP cash advances are based on up to 50 per cent of the anticipated market value of the eligible agricultural products that will be produced or are in storage.

The APP interest free change is not retroactive and will be applied to existing advances under the 2022 Advance Payments Program as of June 20 when the change was announced. Bibeau announced previously that producers would be able to receive 100 per cent of their 2022 pre-production advances immediately when they apply, rather than receiving them in pre-seeding and post-seeding installments.

In 2021, the Advance Payments Program provided $2.39 billion in advances to 17,430 producers across Canada.

Given the significant increase to input costs, in December 2021, Farm Credit Canada proactively offered credit limit increases of 30 per cent for crop input financing to customers that met specific pre-approval criteria.

Farmers experiencing financial challenges are also encouraged to apply for assistance available under the Canadian Agricultural Partnership’s Business Risk Management (BRM) programs to help them manage risk related to significant market volatility and disaster situations.

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