With the latest market signals pointing to falling cattle prices, Manitoba cattle producers have been signing up for a new program that offers cash advances against future livestock sales of up to $100,000 interest-free for up to 18 months.
“Lots of applications are coming in. We didn’t have any completed by mid-September, but now it’s getting quite busy in the office,” said Ken Crockatt, District 9 director of the Manitoba Cattle Producers Association, which is administering the program.
“I guess producers weren’t quite sure what they were going to do. But now that cattle prices are dropping, they are starting to apply for the cash advance.”
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Crockatt has been appointed chair of the Manitoba Livestock Cash Advance Inc., which began operating as a subsidiary of the producers association in August. He will step down from his directorship this fall.
The advance payment program, similar to one which has been available to grain producers for years, was launched with the intent of offering producers more flexibility in selling their livestock.
With the loan, more cow-calf operators might opt to hold onto their calves until later in the year or keep them as spring grassers, said Crockatt.
“Sometimes, fall is a bad time to sell. It’s usually the lowest price in the year,” he said.
The spring credit advance program has been merged into the new cash advance one, and is being delivered by producer associations on behalf of Agriculture Canada. Eligible agricultural products include crops, furs, honey and livestock. Advances of up to $400,000 are offered, but amounts larger than $100,000 will be charged an interest rate of prime rate plus 0.9 percent.
At a meeting last week in Pipestone, Man., hosted by Manitoba Agriculture, some complaints were heard about the new program.
The biggest beef was that to be eligible, producers must be part of the Canadian Agricultural Income Stabilization program (CAIS). They also complained that the amount available to a cattle producer is based on either 50 percent of the value of the animals, or their CAIS reference margin, whichever is less.
That means the size of their advances could be affected by the bad BSE years even though the advance is based on current market prices, ranging from $335.50 for 400 to 700 pound feeder calves to $583 per head for finished cattle over 1,250 lb.
“We had a producer come in with over 200 head, and he walked out the door with about $2,600. He was really disappointed,” said Crockatt. “But that’s the way it’s set up. We’re hoping to get it changed.
“We have a huge problem with CAIS. It’s really restricting what a lot of guys can get for their cattle. What we need now in place is production insurance,” he added.
Like crop insurance, it would be based on the actual value of the cattle, he said.
