Farmers wait for cash advances

UPDATED to include comments from the federal ag minister’s office – May 15, 2020 – 1330 CST – Farmers who have been waiting far too long for their spring cash advances are going to have to be patient a little longer, says one of the administrators of the program.

An application approval process that typically has a turnaround time of three to five days has been taking up to three to five weeks due to delays caused by COVID-19 and more stringent government regulations.

The Canadian Canola Growers Association (CCGA) had completed 1,600 applications by the end of last week. But there were another 2,600 in the system, which is highly unusual.

“We are making headway on it and we should have that backlog wrestled down to the ground by the end of May,” said CCGA president Rick White.

COVID-19 couldn’t have hit at a worse time for Agriculture Canada’s Advanced Payments Program.

April 1, 2020 was the launch of the 2020 program year. It is the start of the busiest couple of months of the year for program administrators.

White said workers are usually prepared for the “wall” of applications descending on their desks. But this year was different because all 65 staff were sent home around mid-March due to COVID-19 safety concerns.

“We lost a lot of efficiency,” he said.

What made matters far worse was Agriculture Canada’s new credit worthiness rules that came into effect on April 1, 2020.

Applications over $100,000 had to achieve a minimum credit score and were subject to a Personal Property Security Act search.

“It takes us a tremendous amount of time and energy to go through all that in detail,” said White.

“A week into that I could see we were going backwards quickly.”

In 2019, the federal government permanently increased the APP loan limit to $1 million from $400,000.

“As this was a significant increase in the amount a producer could receive under the program, new eligibility criteria were implemented to ensure the farm enterprise had the financial capacities to reimburse the advances,” Bibeau’s office said in email.

The new criteria originally applied to all advances over $100,000 but the CCGA sought and received a reprieve, making the new rules only applicable on loans over $400,000.

White said that was a welcome concession but the changes were not retroactive to April 1, so there are still a large number of applications in the system subject to the stricter criteria.

The association has not heard back on requests for further relief from the federal government.

He acknowledged that spring is the time of year that farmers need money to pay for fuel, fertilizer, seed and equipment repairs.

The CCGA expects to return to more normal processing times by the end of the month, even without further government assistance.

“For farmers that have been waiting for quite some time, that won’t be acceptable to them,” said White.

“We understand that and we apologize to them for our part in that.”

The CCGA is one of over 30 administrators of the APP program. Others are not experiencing the same difficulty, although their volume of applications is much lower.

Tom Steve, general manager of the Alberta Wheat Commission, said they have not experienced any delays. Applications are being processed within three to five business days.

White said another potential looming problem with the program is that the due date for repaying 2018 advances has been pushed back to September, 2020 from September, 2019.

Unfortunately, that coincides with the repayment date for 2019 advances.

White said the CCGA will be closely monitoring the situation and will make an assessment in June or July whether to request an extension to the 2019 program repayment date.

The interest-free portion on 2020 cash advances is reverting back to the $100,000 limit after a one-time increase to $500,000 in 2019 to help canola growers deal with the loss of a significant portion of the Chinese market.

White said growers are not concerned about the change because interest rates are incredibly low. The interest rate on advances over $100,000 is the CIBC’s prime rate minus 0.75 percent.

“I hate to say it, it’s not free but it’s almost free even on the interest bearing (portion) given the low rates we’re experiencing right now,” he said.

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