There has been a 30 percent increase in farmer spring cash advances issued this year to prairie farmers through the Canadian Wheat Board and farm leaders say that is at least a slice of evidence that indicates how desperate farmers are for cash.
More than two months after the federal budget promised $1.5 billion in additional spending this year, none of those dollars have moved out of Ottawa.
However, agriculture minister Chuck Strahl also announced changes to the spring cash advance program that doubled the interest free portion of the loan-against-unsold-crop to $100,000.
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That was touted as the fastest way to get spring seeding money out.
On July 17, CWB communications official Heather Frayne said $248 million had been advanced this year compared to $192 million by the same date in 2005.
The 9,300 applicants this year are close to last year’s number but applicants are applying for bigger advances.
The cash advance program has its limits and many farmers are not eligible.
“In order to take out spring advance money, you have to have crop insurance and since this was only announced in June, some producers may not have been able to do so,” said Frayne. “Typically, just 60 percent take out crop insurance.”
In Ontario, farm leader Ron Bonnett said that has been part of the problem.
“Many farmers need money to get the crop insurance but without money flowing, they can’t get the insurance that would make them eligible for cash advance so it is a bit of a Catch-22,” the Ontario Federation of Agriculture president said in a July 17 interview.
He said some lenders who have loaned money to finance spring seeding are refusing to sign letters allowing farmers to designate their crops as collateral for a cash advance when it is already serving as collateral for the loan.
Manitoba farm leader David Rolfe said cash flow in his province is “very very tight.”
“I believe there is a bottleneck in handling applications and that just shows the desperation.”
Canadian Federation of Agriculture president Bob Friesen said it is an argument farmers have been making to the Harper government since it was sworn into office in February.
“One of our consistent messages has been that farmers need cash immediately and to date, despite all the announcements, we have nothing,” he said.
“The cash advance program is helpful but it clearly is not meeting the need.”
The cash crunch has led Bonnett to call on Ottawa to release the $500 million still unallocated from the May 2 budget.
Strahl has said a large portion of that will be used to fund a one-time payment to farmers who have fallen below a government-established family income target, based on 2005 income tax returns. Details have not been announced.
Bonnett said it is needed now.
“If that money is supposed to go to low income farmers, more and more are qualifying every day.”
He said the money should be sent to provincial governments, based on a now-disused distribution formula that allots money to provinces based on the size of their farm economy.
Bonnett said provincial governments then would work with farm groups to devise a way to get the money out quickly. Under the so-called Fredericton Formula, opposed by prairie governments because it does not target need, Ontario would get $100 million of the $500 million.
