See event listings and more articles in this edition of Agri-News: October 31, 2022 issue
“The federal Advance Payments Program (APP) has been available for many years,” says Neil Blue, provincial crops market analyst with the Alberta government. “It has been expanded over time to accommodate a wider range of farming enterprises. Despite several farm management advantages that the APP offers, many producers do not take advantage of it. Considering the rising interest rates, there is even more reason to consider using the Advance Payments Program.”
Under the program, producers can obtain up to $1,000,000 per program year in total advances. The eligible cash advance is based on up to 50% of the anticipated market value of eligible agricultural products on hand or to be produced. For advances on agricultural products that either are in production or are non-storable, and for advances on animals or animal products, additional security is required. This additional security includes one or more of the potential proceeds from a relevant business risk management program, such as AgriInsurance, AgriStability, Farm Income Stabilization Insurance or another acceptable form of security.
Advances are repaid as the secured agricultural products are sold, with up to 18 months to fully repay the advance for most commodities, and up to 24 months for advances on cattle and bison.
Until recently, the Government of Canada paid the interest on the first $100,000 of an advance. On June 23, 2022, Agriculture and Agri-Food Canada announced a temporary increase to the interest-free portion of the APP from $100,000 to $250,000 for the 2022 and 2023 program years. The change is intended to assist with the rising cost of inputs such as fuel, fertilizer and seed. The balance of the advance above the interest-free portion bears a reasonable interest rate.
“Cash advances under the APP provide cash flow to help meet financial needs until sale of the secured agricultural products,” says Blue. “The program provides marketing flexibility, enabling producers to make marketing decisions based on market conditions rather than the need for cash flow.”
Since the advance is considered a loan, the APP cash receipt is not considered income for tax purposes. Instead, income is declared within the accounting period of the sale of the secured products.
APP advances are available through any of 30 participating producer organizations, the APP Administrators, across Canada.
For more information, see:
Contact
Connect with Neil Blue for more information:
Phone: 780-422-4053
Sign up for Agri-News
Start every Monday with the week’s top agricultural stories and latest updates.
Read about all things agriculture at Alberta.ca/agri-news