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Cash advance changes to help canola farmers’ cash flow

A host of changes to the cash advance program are aimed at addressing market loss for canola producers, but some frustrated farmers say it’s just a band-aid, not a solution.

For 2019 the maximum cash advance — loans issued to farmers against growing or stored crops and livestock — will be $1 million instead of $400,000, Agriculture Minister Marie-Claude Bibeau announced in Ottawa May 1.

The interest-free portion on loans for non-canola products remains at $100,000. However, $500,000 is the new interest-free maximum on canola loans.

Why it matters: Canola growers say they need cash flow to offset the loss of the Chinese canola market.

A farmer, with enough non-canola product, can borrow $100,000 interest free, plus another $400,000 interest free on canola for a total of $500,000, said Canadian Canola Growers Association (CCGA) CEO Rick White in an interview May 2.

If farmers have enough canola alone they can get an interest-free loan of up to $500,000, he added.

The interest rate on loans above the interest-free portion is prime minus 0.5 per cent.

A farmer with an average canola yield of 38 bushels an acre would need 2,545 acres of canola to get the maximum $500,000 interest-free loan, a CCGA official said.

Federal response for canola growers.
photo: Source: Canadian Canola Growers Association Photos: Getty Images

(For every tonne of stored canola an eligible farmer can borrow $227.95 under the Advance Payments Program. The loan is repaid when farmers sell the products the loan was made against.)

Ottawa should have made the entire loan interest free, Deerwood, Man., farmer Ian Steppler said via electronic messaging, May 3.

“(T)his canola trade disruption will have a staggered impact on all commodities,” he wrote.

Steppler also accused the government of misleading the public into believing changes to cash advances were the solution to farmers’ problem.

“It isn’t,” Steppler wrote. “That’s what farmers are so upset about.”

“I’m not against the ability to access the money. That’s good, and the interest-free portion is good. But we can’t address a revenue problem with lending more money. It simply angers me more and it’s things like this (that) help demonstrate how out of touch the government is to producer obligations.”

The changes are what farm groups, including the Keystone Agricultural Producers (KAP) and the Canadian Canola Growers Association (CCGA), asked for.

“We certainly recognize it’s not the answer, but it is significant help for the cash flow you will be facing on your farm going forward so we appreciate that,” White said, noting the program was originally created so farmers weren’t forced to sell when prices were low.

Saskatchewan Premier Scott Moe also commended the federal government for having “come to the plate in supporting our canola farmers,” the Regina Leader Post reported.

Trade Diversification Minister Jim Carr thanked Moe, noting that the relationship between the Government of Canada and governments of Manitoba and Saskatchewan “… are not exactly what you would call harmonious.”

“But Premier Moe understands this is a national issue and he understands that we are much stronger together,” Carr said.

Farm groups including KAP, CCGA and Canadian Federation of Agriculture welcomed the changes.

The Western Canadian Wheat Growers said instead of loans the government should have restored access to China’s canola market.

“Farmers are used to managing risk associated with factors that are outside of their control such as weather,” the Wheat Growers said in a news release. “Factors such as trade markets and political interference should be within our government’s control.”

In addition to mismanaging trade with China, the Wheat Growers blames Ottawa for Italy blocking imports of Canadian durum wheat, India blocking imports of Canadian pulses, Vietnam blocking imports of Canadian wheat and for Peru considering doing the same.

However, spokesmen for the trade organization representing those crops aren’t blaming Ottawa.

“This issue is not an easy one,” Canola Council of Canada president Jim Everson said May 2 in an interview. “It’s changing because of the current political frictions between countries so I would say a really strong effort is being made by industry and government to solve this.”

When Pulse Canada CEO Gord Bacon was asked about the issue he noted the trade issues with India go beyond just Canada.

Gordon Bacon.
photo: Supplied

“India’s policy of import levies, quantitative restrictions apply to all countries, not just Canada,” Bacon said. “On the issue of fumigation Canada is being treated the same as every nation in the world with the exception of the United States.”

He added Canada doesn’t “… have the same weight in trading relationships or political relationships… ” with India that the United States does.

“I don’t see evidence that suggests the policy that India has applied to all countries is somehow linked back to the Government of Canada,” Bacon said.

In a May 2 interview Cereals Canada president Cam Dahl said: “We are just in this new protectionist environment so I don’t think that’s coming because of what Canada is doing. That applies whether we’re talking about Vietnam or Peru or Italy.”

However, Dahl noted Cereals Canada has asked Ottawa to launch a WTO complaint against Italy for blocking imports of Canadian durum wheat.

“We continue to have those discussions with the Government of Canada, but it’s not that we haven’t had support, especially at the officials level,” Dahl said. “We have a fantastic post in Italy. Up to the ambassador level is really engaged on the durum file.

He noted groups like his must be non-partisan and represent farmers.

“If a Conservative government were to do something wrong we would call it out,” Dahl said. “If a Liberal government did something wrong we’d do the same.”

About the author

Reporter

Allan Dawson is a reporter with the Manitoba Co-operator based near Miami, Man. Covering agriculture since 1980, Dawson has spent most of his career with the Co-operator except for several years with Farmers’ Independent Weekly and before that a Morden-Winkler area radio station.

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