OTTAWA – The House of Commons agriculture committee last week approved the details of government plans to revamp the farm cash advance program, to take effect next year.
The legislation will go back to the Commons Oct. 21 for a final debate and likely approval of the new rules this autumn.
The bill will set tougher rules for the prairie cash advance program, to try to reduce the level of default. It rolls four different cash marketing loan programs into one, with standard rules across the country.
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federal government proposed several months ago to increase the compensation rate from 80 to 90 per cent and double the maximum payment from $3 million to $6 million
The legislation will give legal grounding to the $50,000 interest-free cash advance which has been operating under government authorization but without a legislative base. It will limit the maximum cash advance to $250,000 for each farm operation.
The last $200,000 would be interest bearing.
It will also tighten control over who can receive advances and how defaulters are pursued and punished for failing to pay back loans.
But the Liberal majority on the committee refused to accept Reform proposals that the government liability under the program be capped at $1.9 billion unless Parliament or the agriculture committee approves an increase.
It opted instead to give cabinet and the agriculture minister the power to increase the maximum debt outstanding if needed.
The government majority on the committee also rejected a Reform proposal that emergency advance payments be interest free and automatically included in the $50,000 interest-free portion of the program unless the minister decides otherwise.
Under the legislation, the emergency cash advances will charge interest unless the minister decides to make them interest free and part of the $50,000.
Jerry Pickard, parliamentary secretary to the agriculture minister, said the intention will be to make any emergency advances interest free but the government needs flexibility to charge interest if it determines the request for emergency advances was not legitimate.
“(Ministerial flexibility) is a protection,” he told MPs before they voted to send the bill back to the Commons. “It is not to eliminate real emergencies from the $50,000. They are meant to be incorporated. But the minister needs to be able to use some discretion.”
