Farmers with bins full of feed wheat received good news from Ottawa last week.
The federal government has agreed to push back the deadline for repaying cash advances on feed wheat to Nov. 1 from Aug. 19.
The Canadian Wheat Board, which administers the cash advances, had asked the government to extend the default date, as had a number of prairie farm groups.
“This is good news,” said Ed Thomas, who manages the cash advance program for the wheat board. “Now farmers will have the information and the options they need to make the decisions that will maximize their returns.”
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He said the decision could benefit thousands of prairie farmers who grew mostly feed wheat in 2004 and were caught in a bind when it came to repaying the advances by the usual summer deadline. The 2004-05 cash advance was $80 a tonne for wheat, but with the price of feed wheat as low as it has been this year, a farmer delivering feed wheat against an advance might end up owing money.
“We had received a number of calls from farmers saying they could deliver feed wheat but if they did, they wouldn’t even get enough to cover the advance,” Thomas said.
Farmers who go into default are assessed interest from the date the advance was taken out and are ineligible for an advance the following year.
The board raised the idea of delaying the default date in a letter to federal agriculture minister Andy Mitchell.
The issue was picked up by a number of farm groups and put forward to prime minister Paul Martin during a meeting in Saskatoon in March. They said it was a way to provide financial relief to thousands of farmers without a big outlay of new federal money.
The extension means farmers with outstanding advances will be able to blend their feed wheat with the hopefully better-quality 2005 crop and then make repayment.
If a farmer hasn’t repaid his advance by Sept. 1, the board will probably opt to transfer the 2004-05 advance to the 2005-06 program. That’s because the interest-free benefit on the first $50,000 of a cash advance will expire at the end of August when the 2004-05 program officially ends.
If an advance remains outstanding after that date, the farmers will be responsible for interest charges accumulated between Sept. 1 and Nov. 1.
Whatever is transferred will reduce the farmer’s eligibility for the 2005-06 account accordingly.
The government will also allow farmers to repay in cash their feed wheat advance. Normally cash repayment is limited to $500 or 10 percent of the value of an advance, with any cash payment beyond that carrying an interest penalty.
