Federal government opens access to greater agricultural loans
March 23, 2020 By Greenhouse Canada
The Canadian federal government announced two new financial measures today to help producers, agribusinesses and food processors through this pandemic period.
Farm Credit Canada (FCC) will receive an additional $5 billion in lending capacity. This will offer increased flexibility to farmers who face cashflow issues and to processors who are impacted by lost sales. As the leading agriculture and food lender in Canada, FCC currently has a loan portfolio of more than $38 billion.
The second measure will allow those with outstanding loans from the Advance Payments Program (APP) due on or before April 30, 2020 to receive a Stay of Default, allocating an extension of six months to repay the loan. The new deadline for outstanding APP loans is October 2020 for 2019 cash advances on flowers and potted plants.
“This measure represents $173 million in deferred loans, and will help keep more money in farmers’ pockets during these critical months,” says the release. “The Stay of Default will also provide farmers the flexibility they need to manage their cashflow when facing lower prices or reduced marketing opportunities. Applicable farmers who still have interest-free loans outstanding will have the opportunity to apply for an additional $100,000 interest-free portion for 2020-2021, as long as their total APP advances remain under the $1 million cap.”
Minister of Agriculture and Agri-Food, Marie-Claude Bibeau, clarified in a press conference today that the APP federal loan program is based on a farmer’s projected production as a way of receiving payment upfront for immediate needs. Advances are repaid as the producer sells their agricultural product, with up to 18 months to fully repay the advance for most commodities.
Bibeau also noted that loan limits increased from $400,000 to $1,000,000 last June. The interest-free portion remains capped at $100,000. For the 2019 program year, there were over 21,000 producers participating and over $3 billion in advances.
“Like many Canadians, I am truly grateful for our farmers and food business owners and employees, who continue working hard so we all have quality food on our grocery store shelves and kitchen tables,” said Bibeau in a release. “Their continued work is essential to our plan to manage COVID-19. The measures announced today will provide farmers and food producers across the country with important financial flexibility they will need during these challenging times.”
“Farmers and food producers work hard to put food on tables across our country, and they should not have to worry about being able to afford their loan payments or having enough money to support their own families,” says Justin Trudeau, Prime Minister of Canada. “We are taking action now to give them more flexibility to meet the challenges ahead in these times of uncertainty.”
Farmers will also continue to have support under the Canadian Agricultural Partnership. The comprehensive suite of business risk management programs are designed to help manage significant financial impacts and risks beyond farmers’ control.
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