Ottawa has waived the need for farmers to make deposits for 2007 AgriInvest.
Instead, the federal government will make direct payments to producers without requiring them to put up their matching share to start off the new program. Normally, producers can contribute up to 1.5 per cent of their annual net sales (ANS) to AgriInvest and the government matches the amount.
The government gave no reason for the unexpected waiver. But Ian Wishart, Keystone Agricultural Producers president, said rumour has it that banks are reluctant to establish AgriInvest accounts for producers.
As a result, Ottawa will make a straight payment to farmers for the 2007 program year.
This follows a $600 million federal Kickstart program launched in December 2007 to get AgriInvest underway.
“Effectively, it’s two years of Kickstart,” said Wishart. “It looks like ad hoc money but it really isn’t.”
The direct payments will total considerably less than $600 million. Wishart said the exact figure isn’t known but it could be around $270 million.
Farmers will be glad to see the money, which was expected to flow last summer. However, not having producers contribute for 2007 will short the program later on after it is fully functional, said Wishart.
For the 2008 program year, only farmers who make deposits to their AgriInvest accounts will receive matching government contributions.
The government also dropped the late-filing fee for the 2007 year.