Glacier FarmMedia — The interest-free portion of the federal Advance Payments Program (APP) will be $250,000 this year, much to farmers’ relief.

The amount had been set to drop back to $100,000 at the end of this month after sitting at $350,000 for 2023.

Federal agriculture minister Lawrence MacAulay announced the change March 25.

“In the face of so many challenges, our hardworking producers continue to show their resilience and produce top-quality products for Canadians and the world,” he said in a statement.

“Increasing the interest-free portion of the Advance Payments Program means improved cash flow and savings for farmers as we head into the 2024 planting season.”

Producers had asked for the amount to be raised after learning in late February it would change.

The announcement is a “welcome relief to farm businesses across Ontario and Canada,” the Ontario Federation of Agriculture (OFA) said in a statement.

“The Advanced Payments Program is an important tool in the toolbox for farmers across the country to access short-term financing for their farm business,” said Drew Spoelstra, OFA president.

The APP offers $1 million to producers of 500 crop and livestock products who can borrow against expected production or produce in storage. The advances are based on up to 50 per cent of anticipated market value of those products.

In 2022, the government raised the interest-free portion to $250,000 and then again to $350,000 last year to deal with high interest rates and volatility.

The federal government said farm operating costs remain uncertain, and raising the interest-free portion would save 11,950 producers an extra $4,916 in interest costs, on average.

The total savings for producers is estimated at $58.7 million.

Support at the beginning of the production cycle allows farmers to buy inputs for the growing season. It also provides some marketing flexibility as producers can sell when it’s best rather than because they need cash.

At the Canadian Federation of Agriculture annual meeting earlier this year, MacAulay had told producers he couldn’t grant their wish for a higher limit but the finance minister might be able to.

The Canadian Cattle Association had asked for the limit to remain at $350,000 but said $250,000 was a good step.

President Nathan Phinney said the APP is a useful tool, and a higher interest-free portion is a relief.

“This sustained increase comes at a time when producers need all economic levers at their disposal to increase food security and economic competitiveness,” he said.

CCA had said the lower limit was “untenable as it does not account for farmers’ current realities.”

“By maintaining the increase to interest-free portion of loans under APP, the federal government can demonstrate it recognizes the needs of producers — across commodities and across the country — who have been facing escalating input costs,” the association said in February.

Grain Growers of Canada also applauded the decision.

Chair Andre Harpe said it would support thousands of grain farmers across the country.

“With the rising cost of inputs and low grain prices at harvest, a higher interest free portion of the APP is needed,” he said.

The GGC said announcing this decision early provides farmers with predictability and stability so they can plan their year ahead.

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For the last few years the government temporarily increased the interest-free amounts to reflect challenging conditions including high interest rates. In 2023, farmers were eligible to receive up to $350,000 interest-free; the maximum total advance available is $1 million.

Now, however, Ottawa will pay the interest on only $100,000, as it typically did.

The Agricultural Producers Association of Saskatchewan said that decision is “causing widespread apprehension” among producers.

APAS and the Saskatchewan Cattlemen’s Association sent a joint letter to federal minister Lawrence MacAulay asking that the $350,000 amount be reinstated.

“It’s been three years since the APP interest-free portion was at $100,000 and interest rates have skyrocketed, grain prices have dramatically declined and input prices have remained high,” said APAS president Ian Boxall in a news release.

“The program needs to reflect the current realities of farm and ranch operations. Our margins are tighter today than two years ago when the amount was increased due to rapidly increasing input costs.”

APAS estimated the change could cost farmers an estimated $30,000 in interest costs.

The group and other organizations will meet with MacAulay next week during the Canadian Federation of Agriculture annual meeting in Ottawa.

The Canadian Canola Growers Association, one of the agencies that offers the APP, opened its early application window for 2024 advances Feb. 12.

—Karen Briere writes for the Western Producer from Saskatchewan.

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Agriculture Minister Marie-Claude Bibeau confirmed Wednesday that the interest-free limit under the Advance Payments Program (APP) for the 2023 program year is now $350,000, effective Monday (May 8).

The regulatory amendments allowing this increase are not retroactive, the government noted. The new limit will be applied to existing APP advances as of Monday, when the amendments came into force, and producers still must pay any interest that accrued on an existing advance before that date.

Bibeau said Wednesday the decision comes as farmers “continue to face significant financial challenges including high input costs and rising interest rates.”

The APP gives eligible farmers access to up to $1 million, calculated based on up to 50 per cent of the “anticipated market value” of production, whether it’s in storage or still to be produced — with “preferential” interest rates on the portion above the interest-free limit.

The operating credit from a cash advance thus can help improve a farm’s cash flow or offer the flexibility to sell commodities into more favourable market conditions, the government said.

Following the budget announcement in March, at least one farm consultant suggested other farmers might consider investing interest-free APP cash to benefit from the current interest rate environment.

APP advances, on most eligible commodities, must be repaid in full over the following 18 months. On cattle and bison production, that repayment period is 24 months.

The single-year interest-free limit increase to $350,000 is on top of last June’s temporary increase to $250,000 for the 2022 and 2023 program years — up from the usual limit of $100,000.

That earlier increase is estimated to save farmers an average of $8,600 over the two years, the government said Wednesday. This week’s increase, meanwhile, is expected to translate to total savings of up to $12.4 million, or an additional $3,600 in interest costs per applicant on average.

The government estimated the total federal investment for these increases for 2022 and 2023 could run up to about $94.9 million.

APP cash advances are delivered in Canada through 30 industry-led associations. One such program administrator, the Canadian Canola Growers Association, said last month it was waiting for the updated interest-free limit to be made available and “will notify customers as soon as we are able to issue advances under these new parameters.”

The CCGA also noted last month that some of the APP advance rates for 2023 have risen or fallen while others remain flat. For example, it said, the 2023 advance rate per tonne for wheat is up 20 per cent, and for canola up nine per cent, over 2022.

The feds, in Wednesday’s release, said they also plan to consult further with the provinces and territories “to explore ways to extend help to smaller agricultural producers who demonstrate urgent financial need.” — Glacier FarmMedia Network

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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.

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

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Federal Agriculture Minister Marie-Claude Bibeau on Wednesday announced a “temporary waiving” of the program’s usual requirement that pre-production cash advances be issued in instalments of 60 per cent up front and 40 per cent after seeding is confirmed.

The temporary waiver, providing for an immediate 100 per cent advance on application, is expected to increase cash flow for producers this spring to help manage current high input costs, Agriculture and Agri-Food Canada said in a release.

The department cited “exceptional circumstances” this spring, such as feed shortages due to drought, along with “disrupted supply chains and increased input costs” such as for fuel and fertilizer, due to the war in Ukraine and delays stemming from the global COVID-19 pandemic.

The Advance Payments Program provides cash advances of up to $1 million based on up to 50 per cent of the anticipated market value of a farm’s eligible production, whether it’s still to be produced or is already stored.

The first $100,000 advanced in a given crop year is interest-free; producers get up to 18 months (24 for cattle and bison) to fully repay a given year’s advance.

The temporary waiver to the up-front limit “comes in time for the planting season and will help farmers purchase the inputs needed for sustainable food production,” Bibeau said in Wednesday’s release.

The Alberta Wheat Commission, which administers the FarmCash advance program for growers in the four western provinces, noted Wednesday the new waiver follows an increase announced last week in the Advance Payments Program’s individual commodity rates.

For example, FarmCash chief operating officer Syeda Khurram said last Friday, a canola producer in Saskatchewan was previously eligible for a total advance of $504,400 on 2,000 tonnes of canola, but the same producer in 2022 qualifies for an advance of up to $727,500 on the same commodity.

FarmCash program administrators said Wednesday that in situations where a producer has already applied for an advance for this spring via FarmCash and received partial funds, the balance of those advances will be issued “within 24 hours.”

“The change announced today is welcomed by producers struggling with their cash flow this season,” Alberta Wheat Commission chair Greg Sears said in that group’s release Wednesday. “In these unprecedented times, changes to business risk management programs are necessary to help producers and industry weather the challenges.”

“Producers are facing some big increases in input costs as well as rising interest rates, and this change will help us to manage our costs,” Ian Boxall, president of the Agricultural Producers Association of Saskatchewan, said Wednesday in a separate release. “This will be especially helpful to young producers and operations that are facing cash flow issues after last year’s severe drought.”

The Advance Payments Program, which is delivered through 30 various ag industry associations, last year provided 17,340 farmers with a total of $2.39 billion in advances.

AAFC on Wednesday also noted that federal ag and agrifood lending agency Farm Credit Canada in December began offering credit limit increases of 30 per cent for crop input financing, for farmers who meet pre-approval criteria. — Glacier FarmMedia Network

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The federal government on Monday announced a stay of default on loans coming due on or before April 30 under the Advance Payments Program (APP), among other measures it’s taking against the financial impacts of the COVID-19 pandemic.

The APP extensions, which affect up to $173 million in deferred loans, are meant to provide farmers with flexibility in managing cash flow against lower commodity prices or “reduced marketing opportunities,” the government said.

The deadlines for repayments of 2018 cash advances for grains, oilseeds and pulses, and for cattle and bison, are now reset to Sept. 30, 2020. The deadline on repayments on 2019 cash advances for flowers and potted plants has also been reset, to Oct. 31, 2020.

Also, farmers who still have interest-free APP loans outstanding will be able to apply for an additional $100,000 interest-free portion for 2020-21, the government said — as long as their total APP advances remain under the $1 million cap.

Farmers looking for more information are asked to contact their APP administrators.

APP administrators taking part in the stay include the Alberta Sugar Beet Growers, Alberta Wheat Commission, B.C. Breeder and Feeder Association, Canadian Canola Growers Association, Manitoba Corn Growers Association, Manitoba Livestock Cash Advance, Western Cash Advance Program, P.E.I. Federation of Agriculture and Agricultural Credit Corporation, the government said.

Lending capacity

The government on Monday also pledged $5 billion for an expansion to the “capital base” at Farm Credit Canada, to boost the “lending capacity” of the federal farm, agrifood and agribusiness lender.

Added lending capacity for FCC — whose loan portfolio today sits at over $38 billion — will provide “increased flexibility to farmers who face cashflow issues and to processors who are impacted by lost sales,” the government said.

FCC plans to “use its resources to find solutions that offer the best chance for recovery going forward so the industry emerges stronger,” the lender said in a separate release Monday.

“Initially, the focus will be on assisting the industry in addressing cash flow challenges so that businesses can remain focused on business-critical functions rather than worrying about how to access funds to keep operating through this difficult time.”

Ag sector support “will also take strong collaboration between banks, credit unions, FCC and other financial institutions,” FCC CEO Michael Hoffort said in the same release, adding the lender “will be working in partnership with other financial providers.”

Existing FCC customers with cash flow or other financial concerns are asked to contact the organization “to discuss alternatives” such as loan payment deferrals or other products.

“Each business’ financial situation is unique, so there may be a combination of options considered,” Hoffort said. “The sooner we can discuss potential challenges, the more options we have.”

‘First step’

Todd Lewis, president of the Agricultural Producers Association of Saskatchewan (APAS), welcomed Monday’s announcements as “a good first step to help spring seeding move forward.”

More must be done in coming weeks, he said, as Saskatchewan farmers’ net farm incomes have dropped by over 40 per cent in the last two years and the current pandemic is creating “unprecedented business instability” going into this production year.

Current business risk management (BRM) programs, he said, “do not provide us with an adequate financial backstop needed to manage these risks.”

Jeff Nielsen, chair of Grain Growers of Canada, reacted to the FCC announcement on Twitter, saying it’s “fair to say farmers do not want more debt” but rather need “BRM programs that work” and “assurances to our international customers that we can get our products to port.”

Nielsen also asked on Twitter whether there would also be federal relief for producers who instead have loans or lines of credit from commercial banks or local credit unions. — Glacier FarmMedia Network, with files from D.C. Fraser and Allan Dawson

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For seven straight trading sessions, canola bids have climbed, from $445.60 per tonne at the close of trading on Sept. 27 to $464.80 on Tuesday.

“Soybean prices which had been on the move higher, to three month highs, have been lending support,” Jubinville said, adding that other vegetable oils in general have been on the upswing.

Canola busted out of its summer-long sideways trading range, he said, and that included busting above its upper resistance of $450-$455 per tonne for the November contract.

But there is a limit, which Jubinville said is tough to gauge.

“My gut feeling is there will be eventually a near-term supply of canola that comes out from the farmer when some targets are hit,” he said.

One such target will be when cash bids exceed $10 per bushel, he said.

Another factor has been the federal government’s cash advance program, which was altered to help farmers hurt by China’s ban on Canadian canola exports.

“There’s a sense that growers, if they’re feeling bullish-minded, may hold supply back from the marketplace and use that cash advance program on canola, [partly to help] deal with near-term cash flow issues,” Jubinville said.

With September being one of the wettest on record on the Prairies, especially in Manitoba, there have been concerns about the crop’s quality.

Jubinville said hopes for the new crop are very likely to be diminished as a late-maturing crop now has to contend with wet conditions and freezing temperatures.

— Glen Hallick reports for MarketsFarm, a Glacier FarmMedia division specializing in grain and commodity market analysis and reporting.

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“It’s three days earlier than we planned, but our team has been working very hard, along with program officials, to get this enhanced service in the hands of the hundreds of farmers who have called our office in recent weeks,” CCGA director of operations Dave Gallant said on the association’s website.

“Our updated 2019 cash advance application is now available on three platforms including phone applications, and two web-based options.”

Last week the federal government announced farmers could apply for the higher advances starting June 10 and money would flow as of June 26.

The federal government announced changes to the Advance Payments Program May 1 aimed at improving canola farmers’ cash flow in wake of China’s boycott of Canadian canola seed.

The new maximum eligible advance is $1 million, up from $400,000.

The maximum interest-free advance on all farm commodities remains $100,000, plus an extra $400,000 for canola only.

The new higher interest-free limit for canola applies to 2019 only. The increase to the total amount farmers can borrow is permanent.

Farmers repay the loans as they sell products. The advances provide farmers with cash flow so they don’t have to sell when prices are low.

The CCGA says farmers should apply right away for cash advances.

“We’ll be accepting pre-applications at the increased limits until June 25,” Gallant said. “It’s a good idea for farmers to get their paperwork done early so that we can process these advances and potentially deposit their advance funds on our first day of issuing, June 26.”

The $1 million maximum eligible advance is cumulative over two program years, including 2019 and 2018.

“If a farmer has a 2018 advance, the value of that advance will be included in calculating the maximum eligible advance for 2019,” Gallant said.

Farmers who want to apply for, or increase their advance, but stay under the current limit of $400,000 can apply now and, if eligible, will have funds issued immediately, once approved. These advances would include the new interest-free limit up to $400,000.

Farmers who want to apply for, or increase their advance to an amount that’s more than $400,000 can complete a pre-application now and, if eligible, will have funds issued beginning June 26.

There are several ways to apply to the CCGA for a cash advance. First- time customers can call 1-866-745-2256. Farmers can also download an application form from the CCGA’s website.

Farmers who have an existing 2019 advance and want to apply for additional funds over $400,000 will have to call to complete an application or download an application form.

Existing CCGA customers who have not yet applied in 2019 and already have an CCGA online account have the option to apply online through their cash advance account login or use one of the other options mentioned above.

A number of other organizations administer cash advances, including the Manitoba Corn Growers Association. — Manitoba Co-operator/Glacier FarmMedia Network

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The CCGA on Thursday announced it’s now accepting applications for the 2017-18 advance payments program (APP), which offers cash advances on 45 different crop and livestock commodities. The CCGA is the administrative agency for the federal program.

This year’s list of commodities includes quinoa for the first time, the CCGA said in a release.

The CCGA said Thursday it will now also accept Moose Jaw-based Global Ag Risk Solutions’ production cost insurance plan as a form of security on field crop advances, alongside crop insurance and AgriStability.

The CCGA also noted Thursday it has moved to a single common form for all applicants, replacing its previous “province-specific” application form. “Regardless of which province you farm in, you will use the same application.”

Producers can download the new form from the CCGA website or apply online. The forms are also available at “most” elevators and grain processing plants.

The APP provides eligible producers with cash advances of up to $400,000, with the first $100,000 being interest-free and an additional $300,000 interest-bearing at prime rate.

“The spring cash advance program provides farmers with access to cash flow on their unharvested crops and newly born livestock,” CCGA CEO Rick White said in Thursday’s release.

“We’ve already been getting calls from farmers, so we are pleased that in the first full week of March we are ready to launch our pre-application process.”

Though CCGA has kicked off its pre-application process now, to allow farmers to get the paperwork done before spring seeding, the association begins issuing advance funds on April 3, White noted. — AGCanada.com Network

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