Farmers unable to pay off their 2005-06 cash advance by delivering grain before the Sept. 15 default date will receive a sympathetic hearing, says a senior Canadian Wheat Board official.
However, Garry Pichlyk added he doesn’t expect more than a handful of farmers to be in that situation when the deadline passes.
“We would work closely with farmers and government before considering any default,” said Pichlyk, the board’s senior manager for farmer services.
For example, he said, if on Sept. 15 there were 40 farmers with $120,000 worth of advances outstanding, the board might ask Ottawa to extend the default date for a third time, to perhaps the end of September.
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Pichlyk said the board is working with grain companies and railways and will do “whatever it takes” to provide farmers who have been unable to deliver enough grain in the past year to repay their advance with an opportunity to do so.
“We think that by Sept. 15 we should have 99 percent of everything resolved and farmers with outstanding contracts should be able to deliver by that date,” he said.
However, he added that the cash advance program is a federal government program, and Ottawa has the final word on its rules and regulations.
Farmers can repay their advances with cash, but only the first $500 or 10 percent of the value of the advance, whichever is greater, is interest-free.
Cash repayments beyond that are subject to interest charges of prime plus three percent from the date the advance was approved.
Germaine Oja, who farms with her husband, Terry, near Dinsmore, Sask., is not happy with the situation.
She and her husband took an $18,000 advance last year, but rail service to their local elevator, 32 kilometres from their farm, was sporadic throughout the year, and when rail cars did arrive, the elevator was quickly filled by farmers who lived closer to the facility, making it difficult to repay through delivery.
The Ojas, who both work full-time off the farm, repaid $5,500 by delivering durum to Moose Jaw and managed to scrape together $11,000 for repayment through personal cheques, leaving about $1,100 outstanding as of last week.
Oja said that in the past, they have always been able to pay off their advances by delivering, and admitted she had no idea that cash payments of more than $1,700 would be subject to interest charges.
“I was floored,” she said, adding she suspects a lot of farmers are also unaware of the rule.
“I’d never heard of this, but then it’s never affected us before. We’ve always been able to haul grain.”
She doesn’t think farmers should have to pay interest on cash repayments if that’s the only way they can pay off the advance because of poor rail service or plugged elevators.
“When you can’t haul, there’s got to be exceptions,” she said.
Pichlyk said he sympathizes with the delivery problems faced by many farmers but added that the rules regarding cash payments are clearly stated in the cash advance agreement.
However, he did say the board will talk to individual producers such as Oja about their situations and may be willing to waive the interest charges if circumstances warrant.
