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Feds raise interest-free limit of the Advance Payments Program

Canada’s federal government has announced that the interest-free limit of the Advance Payments Program has been set at $250,000 for the 2024 program year. This is the portion of advances on which the Government of Canada pays the interest on behalf of producers.

“Canadian producers have faced significant challenges, including elevated input prices and interest rates, which have impacted their cash flow,” said the Honourable Lawrence MacAulay, Minister of Agriculture and Agri-Food. “As farm operating costs remain uncertain heading into the 2024 crop year, this change will save approximately 11,950 participating producers an additional $4,916 in interest costs on average, for a total savings of up to $58.7 million.”

The Advance Payments Program is designed to give producers easy access to low-cost cash advances of up to $1 million, based on the expected value of their agricultural product. Under the program, producers normally receive the first $100,000 interest-free. “The higher limit announced today will give producers access to additional cash flow and interest savings to help cover costs until they sell their products,” MacAulay said. “With this support at the start of the production cycle, farmers will be able to purchase important inputs to support production this growing season.”

The program also provides some marketing flexibility by allowing producers to sell their agricultural products at the most opportune time rather than the need for cash, he added.

Under the Advance Payments Program, cash advances are calculated based on up to 50% of the anticipated market value of eligible agricultural products that will be produced or are in storage. The program is delivered through 27 industry-led associations.