Canadian farmers are planning for the 2024 season assuming the interest-free portion of the prepayment program returns to its pre-2022 level of $100,000.
However, as of today, farmers will have access to the first $250,000 interest-free, following an announcement from Agriculture and Agri-Food Minister Lawrence Macaulay.
The Advance Payment Program provides producers with access to up to $1 million in cash advances based on the expected value of their produce. Under this program, producers typically receive the first $100,000 interest-free. From 2022 to 2023, the interest-free portion of the APP increased first to $250,000 for him and then to $350,000 for him, but the regulatory amendments did not apply beyond his 2023. Producers were planning to return to pre-2022 levels.
Canadian producers are facing significant challenges, including rising input prices and interest rates, impacting cash flow, says Agriculture, Agri-Food Canada. This change will save approximately 11,950 participating producers an average of $4,916 in interest costs, for a total savings of up to $58.7 million for the sector.
“In the face of so many challenges, our hardworking producers have shown resilience and continue to produce the highest quality products for Canadians and the world. Expansion of the interest-free portion of the prepay program will mean improved cash flow and savings for farmers heading into the 2024 planting season,” Macaulay said in a press release.
The advance payment program calculates cash advances based on up to 50 percent of the estimated market value of eligible produce produced or stored. The program is offered through 27 industry-led associations. Advance payments are available on over 500 crop and livestock products across Canada.
