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“The federal Advance Payments Program (APP) has been expanded over time to accommodate a wider range of farming enterprises,” says Neil Blue, provincial crops market analyst with the Alberta government. “Under the program, producers can obtain up to $1,000,000 per program year in total advances.”
In May 2023, the federal Minister of Agriculture and Agri-Food announced an increase to the interest-free portion of the APP to $350,000 for the 2023 program year. The change is intended to “generate more savings for farmers so they can maintain production to sustain their livelihoods through challenging times.” The balance of the advance above the $350,000 interest-free portion to an individual maximum bears a reasonable interest rate.
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, or another acceptable form of security.
Livestock that have been sent for slaughter, animals under supply management (for example, dairy cows and poultry), and breeding animals that are not intended for market during the production period are not eligible under the program. 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 eligible cattle and bison.
“Cash advances under the APP provide cash flow to help meet financial needs until sale of the secured agricultural products. 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,” says Blue.
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
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