Manitoba farmers applying for the Advance Payment Program won’t get the same interest-free portion as they have in the last two years.
On Dec. 5, the Manitoba Crop Alliance (MCA) announced it is now approved to issue APP cash advances on winter cereals planted in fall 2023. However, the interest-free portion of those loans will be only $100,000.
Why it matters: Agriculture and Agri-Food Canada raised the interest-free portion of advance payments to $250,000 in 2022 and again to $350,000 in 2023 due to high interest rates and input costs.
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APP is an Agriculture and Agri-food Canada program that offers farmers low-interest loans based on the value of the eligible agricultural products they will produce.
Under the program, farmers can access up to $1 million in total advances. The federal government pays the interest on the first portion of the loan (in the case of 2024, $100,000), and repayments are made as the products are sold. For winter cereals, farmers have up to 18 months to fully repay the advance.
Why the decrease?
Interest rates and input costs spurred AAFC to increase interest-free portions for the last two years. But while the 2024 program brings the interest-free portion back to what it was in 2021, farmers say input costs and interest rates are still a concern.
Recently released Statistics Canada data shows that, while farm cash receipts in the first three quarters of 2023 were up by 7.9 per cent, grain prices had fallen.
“It is a prime example this year how the cost of inputs is way outpacing the price of grain,” MCA chair Robert Misko told the Co-operator in late November. “Even compared to six months ago, (the) price of grain has dropped quite a bit more. And price of inputs is still staying pretty high.”
When asked why the interest-free portion had been reduced, AAFC responded that “the government continues to monitor the Advance Payments Program to ensure it is meeting the needs of producers.
“The temporary $350,000 interest-free limit under the Advanced Payments Program will continue to be available for 2023 advances until the 2023 application deadline of March 31, 2024,” the agency added.
The MCA is one of several commodity groups that administer the program for the federal government. It continues to process applications for the 2023 program year on 35 different crop kinds, including cereals, grain corn, oilseed crops, pulses, specialty crops, hay and grasses, and honey, a Dec. 5 news release noted.
The MCA further said interest rates on the interest-bearing portion of the cash advances are competitive with major banks and credit unions. Funds can be issued within three to five business days of the application process being completed, the group said.
“As an organization that represents thousands of farmers across Manitoba, MCA understands how important it can be to have the financial flexibility that a cash advance can offer,” said vice-chair Jonothan Hodson in the same release.
“I know other farmers like myself are busy, and our financial needs can be complex, which is why we take great pride in the fast turnaround times we offer on all cash advance applications.”
More information about the APP, including application forms, rates and fees, and important dates and deadlines, can be found online at mbcropalliance.ca.
