COVID-19 has delayed delivery of cash advances by the Canadian Canola Growers Association (CCGA), but that hasn’t been the case for the Manitoba Corn Growers Association.
“It (COVID) hasn’t impacted our ability in terms of still providing that service standard (of dispersing advances) three to seven (business) days (after receiving a completed application),” association general manager Pam de Rocquigny said in an interview May 11.
After the Manitoba Co-operator reported the pandemic is delaying CCGA advances, farmers have been calling the MCGA worried it was affected too, she said.
“There are other administrators in Manitoba, and elsewhere and our clients aren’t experiencing those delays and haven’t experienced those delays with this new program year,” de Rocquigny said.
“I think it’s important for producers to remember that they do have options.”
Spokesmen for two other Manitoba-based cash advance administrators — Manitoba Livestock Cash Advance and the Manitoba Vegetable Producers Association — said their organizations aren’t experiencing any delays either.
The same goes for the Alberta Wheat Commission’s FarmCash Advance, despite a big jump in applications.
Meanwhile, Dave Gallant, the CCGA’s director of finance and operations, says he expects the advance payments backlog his organization has will be cleaned up by month’s end.
“Things certainly look good,” he said in an interview May 12. “Last week we issued over 500 advances to farmers. We are back to normal processing levels so it’s really simply just a matter of now chewing into that backlog and again it looks very good to be very close to completed by the end of May.”
Why it matters: Low- and no-interest cash advance loans under the federal government’s Advance Payment Program help farmers pay for inputs at seeding. If loans are delayed farmers must find other ways to pay and may end up paying higher prices.
A Portage la Prairie-area farmer posted on Facebook May 11 he had not received an advance from the CCGA despite applying March 27.
“I’m still in an OK position for seeding, but because of cash advance delays I missed out on a really great pre-bought 11-52-0 price with my local supplier back in early April,” the farmer wrote. “Now, I have to pick up at a higher price. Hopefully my cash advance will come through before the end of the month when I have to pay my fertilizer bill.
“This is my second year applying. I’m a young farmer just out of university. Last year, it took almost two months for CCGA to process my application as well! By the time I received my disbursement I was already gearing up for harvest. I sold most of my crop a month after I received the loan, so it was pointless!
“Next year, I’ll be applying with the corn growers’ association instead. I know my father has done that this year, and even with the pandemic, they told him it would only take ONE WEEK to process (as a first-time applicant)!”
Last year was an anomaly, Gallant said. The federal government introduced a higher interest-free limit for canola advances effective June 26, 2019 due to trade issues with China. The CCGA had to revise 5,000 applications submitted starting April 1, 2019, Gallant said. Other administrators also had to adjust their applications, he said.
This year’s delay occurred because in mid-March the CCGA moved its 50 cash advance employees to work at home to avoid COVID-19, Gallant said. It took about two weeks to get up and running. If one person became infected with COVID-19 it would have shut the entire office down, including the processing of advances, he said.
“We positioned ourselves to ride out COVID-19 as long as we need to and not impact farmers who use the program,” Gallant said in an interview April 28.
Farmers who apply for an advance ahead of seeding get an advance based on 60 per cent of what they plan to seed. When seeding is complete they can get the remaining 40 per cent. Because of changes to its process, and protecting staff against COVID, the CCGA will issue the remaining 40 per cent “in an extremely timely fashion,” Gallant said.
Gallant isn’t surprised the corn growers are not experiencing the delays.
“When you’re getting 150 (applications) through the door every day if things go bad like they did with COVID-19 it’s going to put you more behind,” he said. “I can tell you last week alone we issued more advances than Corn Growers will issue in an entire year. It’s hard to compare apples and oranges in those scenarios because it’s such a radically different business model given the size of the operation.”
The CCGA has issued advances to around 2,000 farmers so far, on pace with the 4,000 to 5,000 it typically does by the end of July, Gallant said.
The CCGA issues about two-thirds of the advances for all of Canada and 97 per cent of the grain and oilseed advances issued in Western Canada, he said.
There are 31 advance payment administrators across Canada, issuing loans against grains and oilseeds, livestock, ranched-raised fur, special crops, maple syrup, honey, vegetables, greenhouse vegetables and fruits.
The amount farmers can borrow is based on the value of what they intend to produce, or have produced. Loans are repaid as farmers sell their produce.
Eligible farmers can borrow up to $100,000 interest free, plus up to another $900,000 at low interest if they have the corresponding production, for a total of $1 million.
Interest rates vary among administrators and some charge an application fee.
Administrators borrow the money from banks. While the federal government guarantees the loans, administrators may have to cover a portion of loan defaults if it’s determined they didn’t do due diligence in assessing the creditworthiness of a borrower.