Prairie Post (East Edition)

Advance Payments Program an option

- Alberta Agricultur­e

Considerin­g the rising interest rates, there is even more reason to consider using the Advance Payments Program.

“The federal Advance Payments Program (APP) has been available for many years,” says Neil Blue, provincial crops market analyst with the Alberta government. “It has been expanded over time to accommodat­e a wider range of farming enterprise­s. Despite several farm management advantages that the APP offers, many producers do not take advantage of it. Considerin­g the rising interest rates, there is even more reason to consider using the Advance Payments Program.”

Under the program, producers can obtain up to $1,000,000 per program year in total advances. 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, Farm Income Stabilizat­ion Insurance or another acceptable form of security.

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 cattle and bison.

Until recently, the Government of Canada paid the interest on the first $100,000 of an advance. On June 23, 2022, Agricultur­e and Agri-Food Canada announced a temporary increase to the interest-free portion of the APP from $100,000 to $250,000 for the 2022 and 2023 program years. The change is intended to assist with the rising cost of inputs such as fuel, fertilizer and seed. The balance of the advance above the interest-free portion bears a reasonable interest rate.

“Cash advances under the APP provide cash flow to help meet financial needs until sale of the secured agricultur­al products,” says Blue. “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.

APP advances are available through any of 30 participat­ing producer organizati­ons, the APP Administra­tors, across Canada.

 ?? ?? Agricultur­e producers have another option if in need of financial assistance.
Agricultur­e producers have another option if in need of financial assistance.

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