Cashing out: The history of the cash advance in Manitoba

Manitoba’s corn cash advance started 40 years ago followed shortly by canola

Corn was the first non-wheat board crop in Manitoba to qualify for the federal government’s cash advance program starting in 1981.

Jim Pedersen, who was president of the Manitoba Corn Growers’ Association at the time, helped get the association incorporated — a prerequisite to administering the program that offers low- and no-interest loans to farmers using seeded and stored crops as security.

That effort inspired Carman-area farmer Charlie Froebe to do the same for canola, starting in 1984, on behalf of the Prairie Canola Growers’ Council, which later became the Canadian Canola Growers Association (CCGA).

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The Corn Growers is now part of the Manitoba Crop Alliance, which continues to administer advances on corn as well as a number of other crops.

The CCGA currently administers advances on 55 products from crops to livestock to honey.

“On the whole it has been a pretty good program I think,” Pedersen, who has farmed for 50 years near Elm Creek, said in an interview March 16. “I’ve actually participated in it every year. It has been a good program. It has been well run.”

Pedersen downplays his role, stressing he just happened to be president at the time and credits the board of directors for being forward thinking.

“They were my mentor,” he said.

The cash advance program began in 1957 for wheat, durum wheat, barley and oats marketed through the Canadian Wheat Board. Under that selling system, farmers could only deliver when the board called the grain into elevators. Cash advances were designed to help with cash flow.

The program was offered on non-board crops in Eastern Canada in 1977. Soon western farmers were lobbying for the option.

Although non-board crops could be delivered any time, farmers argued with advances they could hold crops until prices improved rather than distress selling to get money to pay bills in the fall.

“I am sure it has helped a lot of people and smoothed out the cash flow,” Pedersen said. “I’d call it a success story. We had administrators who ran the program and did a really good job.”

The program continues to be well run, he added.

Froebe admits he had no idea how big the program would get. He and his wife Bonnie administered it on behalf of the Prairie Canola Growers’ Council and then the CCGA.

For several years they ran it out of their home.

“We had to move (to an office in Carman) because we couldn’t get anymore employees in our living room,” Froebe said in an interview March 17.

“In those days there was no Excel… so I basically had to do my own computer programming.”

The Froebes were also farming until 1996.

“I don’t know how we ever did it,” Froebe said. “Anyway we did.”

By 1999 in addition to canola, the Froebes were administering advances for corn, rye, flax and oats.

When they retired at the end of 1999 the Froebes had 13 employees in addition to themselves, were loaning $200 million a year and had retained earnings of behalf of the CCGA of $1.5 million.

But not everyone thought advances were a good idea, Froebe said. Critics thought it would disrupt the market.

“I said, ‘that’s the whole point.’ Instead of these guys (buyers) getting canola for cheap at harvest time they might have to pay some money for it,” Froebe said.

“It’s no different than an individual just withholding his crop because he wants to. In this case he can pay his taxes and fertilizer bill and other stuff that comes up in the fall and still hang on to his crop and still eat.”

The cash advance program has seen a lot of changes over the last 64 years since being introduced by John Diefenbaker’s Progressive Conservative (PC) government.

In 1989 the Mulroney PC government killed the interest-free portion of the program, but increased the amount farmers could borrow at low interest rates.

The Corn Growers added advances on pulse crops and soybeans in 1994 and 2001.

In 1996 the Chretien Liberal government combined the separate cash advance acts and reinstated interest-free loans.

Spring advances against seeded crops were introduced in 1999 and livestock advances added in 2006.

The CCGA took over advances from the wheat board in 2011 and added even more crops in 2015.

About the author

Reporter

Allan Dawson

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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