OTTAWA – Emergency farm cash advances required because of exceptional weather conditions should be interest free, several farm lobby groups told MPs last week.
During Parliament Hill hearings on proposed new national marketing loan and cash advance legislation, Prairie Pools Inc. and the Canadian Federation of Agriculture praised new rules that will put the $50,000 interest-free cash advance program back into law.
Ottawa says the interest subsidy will cost no more than an average $40 million per year.
However, lobby groups complained while the new law would allow weather-related pre-harvest emergency advances of up to $25,000, they would not automatically be interest free.
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Most MPs on the Commons agriculture committee seemed sympathetic to the argument that the emergency advance should be considered part of the $50,000 eligible for interest-free status.
Liberal Wayne Easter was the only public dissenter.
He said the government should have a separate emergency fund, rather than converting the cash advance program from a marketing aid to a farm emergency program.
No emergency fund planned
However, Easter said later he knows of no government planning under way to create such an emergency fund.
For Gordon Pugh from prairie pools, that was the point.
“If there was an emergency fund, great, but there isn’t so this is the program we have,” he said after the meeting.
He told MPs that in recent years, a number of bad weather episodes left farmers unable to thresh their grain. “The emergency advance provided them with the ability to meet financial obligations until the crop could be harvested.”
His argument was bolstered Oct. 1 by reports from the Prairies about grain fields covered by a freak snowstorm.
MPs will debate the proposal this week when they go through clause-by-clause study of the Agricultural Marketing Programs Act.
Support program
In general last week, farm witnesses asked for some changes but supported the overall intent of the legislation.
When it takes effect next Aug. 1, there will be one cash advance program across the country with rules that apply equally.
Each farm operation will be entitled to a maximum $250,000 in cash advance, the first $50,000 interest-free. There will be tougher rules governing defaulters.
On the Prairies, the new program will replace the Prairie Grain Advance Payments Act which in recent years ran into problems with high default rates compared to the advance payments program that operates for non-Canadian Wheat Board crops.
Tighter administrative controls since 1994 have sharply reduced defaults but government officials say the new rules are designed to make it even more difficult for farmers to dodge their debt obligation.
The farm lobbyists did ask MPs to consider some minor changes.
The CFA said the cash advance maximum limit should be indexed to rising farm costs.
And the Ontario Wheat Producers’ Marketing Board asked that the federal initial payment guarantee be changed from a price guarantee to a loan guarantee to make the wheat board eligible for a lower interest rate when it borrows from the bank.
