Farmers who aren’t getting cash advances to reduce their interest expenses should take another look at the federal program, says a provincial crops market analyst.
The Advance Payments Program, as its formally called, has been expanded over the years and now covers a wider range of farming operations but “many producers do not take advantage of it,” said Neil Blue.
“Considering the rising interest rates, there is even more reason to consider using the Advance Payments Program,” he said.
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Producers can get a loan of up to $1 million covering half of the market value of eligible “agricultural products” (including grain, livestock, produce and honey) pledged as security. The interest rate for most administrators of the program is typically less than the prime rate, with many offering prime minus 0.75 per cent.
But a portion is also interest-free, and this summer, the federal government upped that interest-free portion to $250,000 for the 2022 and 2023 program years (from $100,000 previously), Blue noted.
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“The program provides marketing flexibility, enabling producers to make marketing decisions based on market conditions rather than the need for cash flow,” he said, adding the move was made to help farmers deal with the rising cost of inputs.
There are several organizations that administer the program in Alberta. A list of cash advance administrators, as well as their administrative fees and rates on the interest-bearing portion of the loans, can be found at the Government of Canada website.
