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On Thursday, Minister of Agriculture and Agri-Food, Marie-Claude Bibeau, announced that the interest-free portion of the Advance Payments Program will increase from $100,000 to $250,000 for the 2022 and 2023 program years. As a result, participating producers will save on average $5,500 in interest costs over the next two years. This change will represent total savings of up to $61 million over two years for approximately 11,000 producers.
“This year, agricultural producers are facing significant increases in input prices. By suspending interest on the first $250,000 of their Advance Payments Program loans, we are providing relief to those women and men who work so hard to feed us and the world in these uncertain times,” said Bibeau.
The Program is designed to help producers manage their working capital by providing cash advances of up to $1 million against the expected value of their commodities. Through the increase to the interest-free portion, eligible producers will have access to additional cash flow over the next two growing seasons.
The change to the program will make the purchase of important inputs such as fuel, fertilizer and seed more affordable for producers. This will ensure they can maintain production until they are able to sell their products in the fall or winter. The interest savings and access to cash flow are both critical in helping Canadian producers continue to contribute to global food security.
The Advance Payments Program cash advances are calculated based on up to 50% of the anticipated market value of the eligible agricultural products that will be produced or are in storage.
The amendment to the Agricultural Marketing Programs Regulations is not retroactive, meaning the new limit will be applied to existing advances under the 2022 Advance Payments Program as of June 20, 2022, when the regulatory amendments came into force.
As part of the Government of Canada’s efforts to support producers this spring, Minister Bibeau previously announced that producers would be able to receive 100% of their 2022 pre-production advances immediately when they apply, rather than receiving them in pre-seeding and post-seeding installments.
The Advance Payments Program is delivered through 30 industry-led associations.