Producers applying to the program for the coming year have discovered that the interest-free portion has been reduced
REGINA — Farmers may have to wait until the federal budget to find out if the interest-free portion of cash advances will be available at the same level as last year.
The Advance Payment Program offers up to $1 million in loans, and $100,000 is normally interest-free. However, in the last few years the government raised that to $250,000 and then to $350,000 in Budget 2023 as interest rates and production costs soared.
The government estimated it would spend $13 million to cover the interest and invest $95 million in 2022 and 2023 because of the changes.
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Several farm organizations have, in pre-budget submissions for 2024, asked for the higher amount to be retained. The Canadian Federation of Agriculture recommended it be permanent “to make the program more accessible and responsive to higher production costs.”
The Canadian Cattle Association also asked for it to remain, saying it appreciated the positive impact of the higher amount.
But when some farmers recently began applying for the coming year they found the amount had dropped back.
Ian Boxall, president of the Agricultural Producers Association of Saskatchewan, said he also saw the interest rate had gone up from prime less 0.75 percent to prime less 0.25 percent.
He said farmers would have liked some notice.
“My biggest concern is there wasn’t much talk,” he said last week. “There was grumbling they were going to do it and then, boom, it was done.”
The agriculture department said the limit had been temporarily adjusted to support producers during challenging financial times.
“The temporary $350,000 interest-free limit under the Advance Payments Program will continue to be available for 2023 advances until the 2023 application deadline of March 31, 2024,” the department said. “Further information about the 2024 program year will be announced in due course.”
Boxall said the amount could be changed at any time. He said APAS and others would raise the issue this week during meetings in Ottawa.
Federal agriculture minister Lawrence MacAulay was scheduled to address the CFA annual meeting Feb. 27.
Boxall also said he recognizes that other industries don’t have access to this type of program, but it has been around for years.
He said the change represents millions of dollars in Saskatchewan and suggested Ottawa could have reduced it to $250,000 and then held consultations.
The CCA said producers, especially younger ones, need all financial levers at their disposal.
“The $100,000 is untenable as it does not account for farmers’ current realities facing inflation and interest rate increases. By maintaining the increase to interest-free portion of loans under APP, the federal government can demonstrate it recognizes the needs of producers — across commodities and across the country — who have been facing escalating input costs,” the association said in an emailed statement.
The federal loan guarantee program is available through 30 producer organizations, which act as administrators. Advances are based on up to 50 percent of anticipated market value of eligible production.
