Ottawa makes changes to the Advance Payments Program

The interest-free portion of the prepayment program, better known as a cash advance, is increased by the federal government.

The interest-free portion will increase from $100,000 to $250,000 for the 2022 and 2023 program years. Federal Agriculture Minister Marie-Claude Bibeau says this will help farmers with input costs higher.

It says participating producers will save an average of $5,500 in interest costs over the next two years, which translates to up to $61 million over two years for about 11,000 producers.

The Advance Payments Program helps producers manage their working capital before their crops are sold after the growing season. The government press release announcing the change is below:

Government of Canada announces interest relief for agricultural producers

June 23, 2022 – Ottawa, Ontario – Agriculture and Agri-Food Canada

Today, the Minister of Agriculture and Agri-Food, the Honorable Marie-Claude Bibeau, announced that the interest-free portion of the Advance Payments Program will increase from $100,000 to $250,000 for program years 2022 and 2023. This will save participating producers 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.

Recognizing the significant challenges facing Canadian producers, including rising input costs, the Government of Canada is ensuring farmers have access to cash to cover crop-related expenses by modifying 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 products. With the increased interest-free portion, eligible growers 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 allow them to maintain production until they are able to sell their produce in the fall or winter. Interest savings and access to cash flow are both essential to help Canadian producers continue to contribute to global food security.

As pressure on global food supplies continues to mount, Canada stands ready to help fill the gap in global production. The Government of Canada is committed to ensuring that producers have the resources they need to protect Canada’s food systems and maximize their contribution to global food supplies.

Fast facts

  • Advance Payments Program cash advances are calculated based on a maximum of 50% of the expected market value of eligible agricultural commodities to be produced or stored.
  • The amendment to the Agricultural Marketing Programs Regulations is not retroactive, meaning that the new limit will apply to existing advances under the 2022 Advance Payments Program from June 20, 2022, when the regulatory changes come into effect.
  • As part of the Government of Canada’s efforts to support producers this spring, Minister Bibeau previously announced that growers could receive 100% of their 2022 pre-production advances immediately upon request, rather than receiving them in pre-seeding and post-seeding installments.
  • The advance payment 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.
  • In light of the significant increase in input costs, in December 2021, Farm Credit Canada proactively offered credit limit increases of 30% for farm input financing to clients who met approval criteria specific prerequisites.
  • Farmers in financial difficulty are also encouraged to apply for assistance offered through the Canadian Agricultural Partnership. Enterprise Risk Management (ERM) programs to help them manage the risks associated with significant market volatility and disaster situations.

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