The Canadian government has announced that the interest-free portion of the Advance Payments Program will increase from $100,000 to $250,000 for the 2022 and 2023 program years. As a result, participating producers will save on average $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.
In recognition of the significant challenges facing Canadian producers, including rising input costs, the Government of Canada is ensuring farmers have access to cash flow to cover crop-related expenses by making a change to the Advance Payments Program.
The Program is designed to help producers manage their working capital by providing cash advances of up to $1 million against the expected value of their commodities. Through the increase to the interest-free portion, eligible producers will have access to additional cash flow over the next two growing seasons.
The change to the program will make the purchase of important inputs such as fuel, fertilizer and seed more affordable for producers. 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.
· The Advance Payments Program cash advances are calculated based on up to 50% of the anticipated market value of the eligible agricultural products that will be produced or are in storage.
· The amendment to the Agricultural Marketing Programs Regulations is not retroactive, meaning the new limit will be applied to existing advances under the 2022 Advance Payments Program as of June 20, 2022, when the regulatory amendments came into force.
· The Advance Payments Program is delivered through 30 industry-led associations.
· 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% 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.
Source: Agriculture and Agri-Food Canada June 23, 2022 news release