The cash advance accepts new requests
One of the most popular agricultural programs in Canada – the Advance Payments Program – is now accepting requests for post-harvest advances.
The APP is designed to give primary producers additional cash flow flexibility by offering up-front cash advances of up to $ 1 million per eligible applicant.
The only collateral required is inventory of unsold agricultural products or income guarantees provided by provincial crop insurance or other programs such as Global Ag Risk Solutions or AgriStability.
The APP program offers interest-free financing on the first $ 100,000 of advanced and risky financing at a prime rate less 0.75% on the next $ 900,000.
Advances are offered to farmers who produce and sell any of 55 agricultural products, including field crops and livestock.
Advances can be used for any farm-related purpose, such as paying for input costs, expanding farm operations, and maintaining or upgrading farm infrastructure or equipment.
Many organizations administer the APP program on behalf of the federal government.
The Canadian Canola Producers Association is the largest program administrator in the country, with total cash advances of over $ 2 billion in 2019.
Dave Gallant, director of finance and operations at the GCAC, said farmer participation in the program has been strong so far in 2021.
“What I can tell you is that we’ve seen a lot of optimism from farmers this year,” he said.
On April 1, the CCGA issued pre-seed advances worth more than $ 200 million in a single day, he said.
The rapid adoption of the program continued until the next registration phase for seedling advances in May, June and July, he added.
“We have seen a high and continued level of demand for the program from farmers (the value of advances) reaching record levels for this time of year. “
Gallant said there was uncertainty over the use of the program during the post-harvest period.
Fall or post-harvest advances typically represent 40 to 45 percent of total advances issued by the CCGA.
However, with many grain producers forecasting below-average yields this fall, advances on harvested grain stocks could be lower than normal.
“We’re just waiting to see what this (fall admission) period will look like,” said Gallant.
“Given the conditions this year, we know that many of our customers may not be producing enough grain to even receive a cash advance (in the fall),” he continued.
“But we also know that there will be farmers who will be able to produce a crop and… who believe that prices will continue to rise because of the reduced supply.”