The federal government recently announced financial support for producers to get through the current tariff situation with the United States, and now China.
Farm Credit Canada is providing $1 billion in new lending to alleviate financial challenges.
“We know that agriculture and food producers across Canada are bracing for uncertainty,” said Justine Hendricks FCC president and CEO in a news release. “Agribusinesses, farm operations and food processors are key drivers of our economy and FCC is ready to provide meaningful and immediate support to keep the industry moving forward at this critical time.”
Hendricks says the initial focus “is on assisting the industry in addressing cash flow challenges so that businesses can adjust to a new operating environment.”
Existing customers and non-customers need to meet criteria, including “access to an additional credit line up to $500,000 and new term loans” and are advised to contact their local FCC office to discuss their individual situations and to see if they qualify. FCC also says existing customers have the option to “defer principal payments for up to 12 months on existing loans.”
Meanwhile, Agriculture and Agri-Food Canada announced the interest-free portion of the Advance Payments Program is increasing for this year to $250-thousand from $100-thousand.
The program provides marketing flexibility by allowing the farmer to sell his or her agricultural products based on market conditions rather than the need for cash.
Minister of Agriculture and Agri-Food Canada Lawrence MacAulay says, in a news release, raising the interest-free amount will give farmers extra cash flow and savings amid trade uncertainty and different challenges.
The Canadian Canola Growers Association (CCGA) is one of the organizations that administers the Advance Payments Program on behalf of the federal government.
Dave Gallant, the Vice President, Finance and APP Operations with the CCGA, says they’ve processed just under two thousand cash advances from farmers to date and will be applying the change moving forward. Gallant says they’ll be looking “at every advance that we’ve processed to determine if the farmers have to do anything. If they have to do something, we’ll contact them directly.”
The cash advance will start being issued on April 1st, but farmers can apply now so that their is application is already in the queue.
The interest-bearing part of the advance is the prime rate minus 0.25%. As an example, Gallant says if a farmer borrowed $500-thousand under the program, the first $250-thousand is interest free and the farmer would only have to pay 4.95% interest on the other $250-thousand.
“Compared to a loan at $500-thousand at prime you’re almost saving $14-thousand, and at prime plus one that’s almost $19-thousand, and of course the more you borrow under those rates, the more you’re going to save.” said Gallant.
(with files from Neil Billinger, CJWW)