Farmers who haven’t had a chance to repay their cash advances through no fault of their own are getting a break.
The federal government announced last week that it was issuing a “stay of default” on repayment of cash advances for producers who have been unable to market their wheat, durum, lentils and honey because of a lack of sales opportunities.
The extensions came in response to requests from the organizations that administer advances for those commodities, and were welcomed by grower representatives.
“It’s good news for lentil producers,” said Garth Patterson of the Saskatchewan Pulse Growers Association.
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The association asked for an extension of the Aug. 15 repayment deadline due to a variety of factors outside of farmers’ control that limited their chance to sell lentils during the 2005-06 crop year.
Subsidies available under the U.S. farm bill resulted in a significant increase in U.S. lentil acreage and enabled growers south of the border to sell at prices below their costs of production throughout the year.
“Those two factors really resulted in lost opportunities for Canadian growers to market lentils this year,” said Patterson.
As a result Canadian inventories ballooned, with a carryover of almost 600,000 tonnes as of July 31, 2006, representing about half of 2005 production.
Patterson said Canadian growers responded to the situation by slashing 2006 acreage by about 33 percent.
“Growers responded to the market signals and tried to mitigate the situation by cutting acreage, not just trying to farm the programs,” he said.
If the stay of default hadn’t been granted, growers would have been forced to dump their stocks on the market for rock-bottom prices, creating chaos in the market, or hold on and face interest penalties.
For wheat board grains, the board was unable to accept all of the durum and No. 3 CW red spring wheat offered by some farmers under contract due to unfavourable market conditions. For example, no No. 3 wheat was taken under the C Series contract.
About 3,000 to 4,000 affected farmers will have their outstanding advances automatically rolled over on Sept. 1 into the 2006-07 cash advance program.
Farmers have the option of paying off their outstanding advance in cash by Jan. 31, 2007, but CWB program administrator Ed Thomas warned interest would be applied after Sept. 1.
“It really wouldn’t pay to put it off until January,” he said.
Bob Ballard, president of the Alberta Beekeepers Association, said apiarists across Western Canada had been anxiously awaiting a decision on the extension request.
“A lot of producers were really worried about the situation,” he said from DeBolt, Alta. “With a change in government you’re never quite sure what to expect, but I think they certainly showed a lot of flexibility.”
Honey prices collapsed in the fall of 2004 due to a variety of market factors that created a global oversupply, falling from around $2 a pound to around 75 cents, well below production costs of more than $1 a lb. Prices remained at those low levels throughout 2005 and into 2006, keeping producers out of the market.
“This was definitely good news,” said Ballard.
Ernie Doerksen of the Canadian Canola Growers Association, which administers cash advances for non-CWB grains, said it’s not inconceivable that growers of other crops would still request a stay.
“If somebody can show us they have had no opportunity to market another commodity, we would act on their behalf as well,” he said.
Last year the repayment deadline was extended for a wide range of special crops because of a truckers’ strike at the Port of Vancouver, along with growers holding stocks of low quality canola for which there was no market.
