Spring Credit Advance Program (SCAP)

T he Spring Credit Advance Program (SCAP) operates under terms and conditions similar to those of the Advance Payments Program (APP). As with the APP, guarantee agreements with the producer organizations administering the program and their lenders will include:

• a repayment guarantee to the lender for the advances issued by an organization, and
• a commitment that the government will pay the interest on the 50 000$ of advances issued to each producer.

Eligibility Criteria

Advances will be issued through producer organizations, a listing of which can be found in the regional contacts section of this document. To be eligible for a spring advance, the producer would have to meet the current eligibility requirements of the APP, as set out in the legislation. The producer must:

• be 18 years old;
• own the crop to be planted;
• be creditworthy;
• not be in default under any repayment agreement or subject to an ineligibility period as a result of being in default;
• when the producer is a corporate entity, all shareholders must agree to be personally liable for the advance; and
• have a priority agreement signed by the producer's lender releasing any security the lender holds on the crop related to the advance.

In addition, the producer would have to:

• participate in the crop insurance program and pay the premiums to protect the advance in the case of a crop failure; and
• provide the producer organizations with an assignment of the crop insurance policy so that any payments can be directed to the advance.

Summary

The Spring Credit Advance Program (SCAP) provides producer organizations and their lenders with a repayment guarantee for advances of up to 50 000$ which are issued to producers in the spring. The objective of the program is to assist producers with their spring input costs.

Under the Program, the Government will pay the interest on each of the advances from the date of issuance until the advance is repaid. The producer has until December 31 of the year in which the advance was issued to repay the advance or transfer it to an advance under the Advance Payments Program (APP) of the Agricultural Marketing Programs Act (AMPA). With the repayment guarantee as security, the organizations can arrange for financing with which to make the advances.

The major difference between SCAP and APP is the requirement for crop insurance, or similar type of program, to protect the advance in the case of a crop failure, and the assignment of proceeds to the producer organization issuing the advance.

For any individual or farming operation, the maximum spring advance is 50 000$. The advance is calculated by multiplying the producer's insured yield under crop insurance by the advance rate provided under the guarantee agreement. In no instance should the amount of the advance exceed the total insured value of the crop under crop insurance. A first instalment of 60% of the eligible spring advance could be issued as early as March based on the intended crop insurance acreage for which the producer applied. A final instalment of the remainder of the eligible spring advance is then made after the seeded acres are declared. In the fall of the year, the spring advance can be transferred to an advance under the APP upon normal verification of the amount harvested and in storage. Any shortfalls would be due from the producer directly or from crop insurance proceeds.

The deadline to repay the advance is December 31 of the year in which the advance was issued. The interest-free provision will continue until the producer repays or transfers the advance. As with the APP, if declared in default, a producer will be responsible for the interest paid by the government on the outstanding amount of the advance back to the date it was issued.

Ontario Contact(s):
Ontario Black Tobacco Growers Association
P.O. Box 669
Cedar Springs, Ontario  N0P 1E0
Telephone: (519) 676-8294