One of Canada’s most popular farm programs — the Advance Payments Program — is now accepting applications for post-harvest advances.
The APP is designed to give primary producers additional cash flow flexibility by offering immediate cash advances of up to $1 million per eligible applicant.
The only security required is unsold inventories of farm commodities or income guarantees provided through provincial crop insurance or other programs such as Global Ag Risk Solutions or AgriStability.
The APP program offers interest-free financing on the first $100,000 advanced and sub-prime financing at a rate of prime minus 0.75 percent on the next $900,000.
Advances are available to farmers who produce and sell any one of 55 agricultural commodities, including field crops and livestock.
Advances can be used for any farm-related purpose, such as paying input costs, expanding farm operations, and maintaining or upgrading farm infrastructure or equipment.
There are numerous organizations that administer the APP program on behalf of the federal government.
The Canadian Canola Growers Association is the largest program administrator in the country, with total cash advances in excess of $2 billion in 2019.
Dave Gallant, director of finance and operations at CCGA, said farmer participation in the program has been brisk so far in 2021.
“What I can tell you is that we’ve seen a lot of optimism from farmers this year,” he said.
On April 1, the CCGA issued pre-seeding advances worth more than $200 million in a single day, he said.
Brisk program uptake continued through the next sign-up phase for seeding advances in May, June and July, he added.
“We saw a continued high level of demand for the program from farmers, (with the value of advances) being at record levels for that time of year.”
Gallant said there is uncertainty about what program uptake will look like in the post-harvest period.
Fall or post-harvest advances typically account for 40 to 45 percent of the total advances issued by CCGA.
However, with many grain growers anticipating lower-than-average yields this fall, advances taken against harvested grain inventories may be lower than usual.
“We’re waiting to see what that (fall intake) period will look like,” Gallant said.
“Given the conditions this year, we know that a lot of our customers may not produce enough grain to even take a (fall) cash advance,” he continued.
“But we also know that there are going to be some farmers who will be able to produce a crop and… who believe prices are going to continue to rise because of reduced supply.”