Changes to three Saskatchewan government livestock loan programs should make it easier for producers to make payments and gain access to working capital.
Dave Boehm, financial programs director for Saskatchewan Agriculture, said the programs needed more flexibility to help producers in the current market environment.
The changes include increased limits on the Livestock Loan Guarantee programs for breeder and feeder cattle and the ability to postpone 2004 principal payments on 2003 BSE loans and 2002 drought loans.
Maximum loan limits for breeder cattle have increased to $125,000 from $75,000 and the limit on feeders has increased to $200,000 from $150,000.
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The maximum combined loan that a single producer can have in each program is still $225,000.
Without the changes, more participants would have been forced to sell into the cash market this fall to try to get working capital, Boehm said. Participants also qualify for the set-aside programs.
“The Livestock Loan Guarantee is all about retained ownership,” Boehm said.
The government realizes that people participating in the breeder option, for example, purchased cows at pre-BSE prices and are still trying to make loan payments against those prices, he added.
Merv Ross, program manager, said there are slightly more than 5,000 producers in both options right now.
Outstanding loans total about $110 million and the government guarantees 25 percent of that.
Boehm noted that since the program was introduced in 1984 losses are only between 0.3 and 0.4 percent.
Ross said increases in loan limits were also necessary to accommodate ongoing loan extensions, which the government offered earlier this year in the feeder program.
The deferred principal payments for the government-guaranteed BSE and drought loans came about after discussion with financial institutions.
“We recognize that cash flow is a problem this fall and we’d like the ability to postpone the principle payment,” said Boehm.
“(Lenders) had to agree this was an appropriate option. We don’t want these loans going into default.”
Producers should contact their lenders about the deferrals and Saskatchewan Agriculture about the livestock loan guarantee program.
