The Canadian Canola Growers Association wants Ottawa to extend more credit to farmers through the Advance Payments Program.
Executive director Rick White told a parliamentary committee in Ottawa that the number of farmers applying for APP loans was greater than ever in the 2013-14 crop year.
Rail backlogs that disrupted grain deliveries across much of Western Canada last winter created short-term cash flow problems for thousands of farmers, he said.
As a result, applications to the program were up significantly.
In an Oct. 9 presentation to the House of Commons’ agriculture committee, White said his organization supports provisions in Bill C-18, the Agricultural Growth Act, which will loosen APP eligibility rules and allow farmers to access cash advances more easily.
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However, White also suggested that the current credit limit of $400,000 per producer is no longer enough to provide an adequate level of relief to many large farmers.
“The number of farmers that are hitting the limit at $400,000 is increasing,” he said.
“When you look to the future, farm sizes are getting bigger … input prices keep going up and $400,000 doesn’t go nearly as far as it used to.”
The CCGA is Canada’s largest administrator of cash advances through the Advance Payments Program.
The program allows farmers to acquire short-term loans using future grain sales as security.
Under current program rules, maximum loans are set at $400,000 per producer, with the first $100,000 offered interest free. The remainder is loaned at prime commercial lending rates, with full repayment expected within 18 months or less.
In the 2013-14 crop year, the CCGA advanced APP loans worth $1.59 billion, up 50 percent over the previous year.
Nearly 12,500 farmers took advantage of the program, compared to fewer than 10,000 a year earlier.
The Agricultural Growth Act, which the agriculture committee is currently studying, proposes amendments to the Advance Payments Program.
White said the proposed amendments will result in a more responsive program that is better equipped to address farmers’ short-term cash flow needs.
However, credit limits need to be reviewed and expanded, he said.
In addition, financial penalties that are imposed when growers fail to provide adequate documentation are frustrating farmers and creating an unnecessary administrative burden, he said.
White suggested that the Agricultural Growth Act should include additional amendments to the program.
