OTTAWA – A Commons committee last week began hearings on legislation which will revamp the cash advance program for Canadian farmers.
Four existing marketing loan programs are being rolled into one national program, with similar rules across the country.
Among the changes will be creation of legislative authority for the interest-free portion of the program and tighter controls to reduce the level of prairie default.
“It will reduce inconsistencies in program administration,” MP Jerry Pickard, parliamentary secretary to the agriculture minister told the Commons agriculture committee Sept. 26 as it opened hearings.
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“It will reduce overall program costs.”
Pickard said the administrative costs and defaults will cost less than $25 million this year, compared to $64 million three years ago.
Once the new rules are in place, the levels of default should be even less, he said.
Phil Jensen, a senior Agriculture Canada official involved in writing the new legislation, told the committee a major goal will be to make it more difficult for prairie farmers to default on repaying their cash advances.
“Defaults were getting out of hand,” he said.
The new law, once approved by Parliament and implemented for the 1997-98 crop year, will make a number of changes in the program.
Cash advance maximums will be raised to $250,000 for each farm operation, with up to $50,000 of that interest free.
On the Prairies, payments would be made to producers rather than on the basis of Canadian Wheat Board permit books.
There would be closer monitoring of those holding outstanding debt and higher costs and penalties for those who default, more in line with rules which have applied to non-wheat board advances which are administered under the advance payment for crops act.
Pickard said the new rules, which will apply equally across Canada, were widely supported by farm groups during more than a year of consultation.
The government will limit the cost of the interest subsidy to an annual $40 million, using a three-year average.
