GENERAL ISSUES
| 1. |
Q. |
How long will this program last? |
|
A. |
The program commenced April 1, 2000
and was extended in 2003 for an additional five years. The program's
main purpose is to help farmers with spring input costs. |
| 2. |
Q. |
Why is the spring credit advance capped at $50,000 when the cost of planting the crop is much higher?
|
|
A. |
It is the intention of the government to assist in seeding costs in these times of lower commodity prices. However, farmers must also share in the normal business risks of farming by providing part of the input costs from their normal credit facilities. This is not designed to be the whole answer to the problem. When combined with other initiatives, it will provide substantial assistance to producers.
|
| 3. |
Q. |
How many farmers do you expect will benefit from the Spring Credit Advance Program and what amount in total advances would this represent? |
|
A. |
Approximately 37,000 farmers participated
in the program for the 2002 crop year and the total amount advanced
was $711 millon. |
| 4. |
Q. |
Since I must have my bank sign a priority agreement giving the government priority over any crop insurance payments, will the bank reduce my operating line by the amount of my spring advance? |
|
A. |
It is our understanding that lenders
will be assessing each individual client and advancing credit
based on the credit worthiness of the client. |
PRODUCER ORGANIZATIONS
| 5 |
Q. |
How do I apply as a producer
organization? |
|
A. |
In order to apply for an advance
guarantee agreement you must be a recognized producer organization.
Please see Participating Organizations
on this website to view the current eligible producer organizations.
The application forms are located in the Administration Guidelines
and you can receive a hardcopy by mail by getting in contact
with Agriculture and Agri-Food Canada (AAFC). |
| 6. |
Q. |
What is the involvement of Agriculture and Agri-Food Canada in delivering the Program to my members? |
|
A. |
AAFC delivers a guarantee in case of non-repayment from a producer and will advise and guide you in managing the Program. Management of the Program includes banking arrangements, credit checks, storage inspections at the producer's facilities, issuance of the advances, receipt of repayments of advances and other related tasks.
|
| 7. |
Q. |
How do I cover the cost of delivering this program to my members? |
|
A |
The Program enables the producer
organization to charge administration fee to producers. In addition,
AAFC will cover part of any overhead costs to a maximum of $20
per participating producer. |
| 8. |
Q. |
How is the advance rate determined? |
|
A. |
The rate is based on half (50%)
of the expected average farm gate price of the crop for the
crop year in which the advance is to be issued. |
| 9 |
Q. |
As a producer organization, what am I liable for? |
|
A. |
The guarantee offered
by AAFC will cover 100% of an advance made to a producer. |
| 10. |
Q. |
What if, by December 31 of the
year in which the advance was issued, the producer did not repay
their advance in full? |
|
A. |
At this point, the producer can
roll their advance into the fall Advance Payments Program. If
not, the producer is declared in default and is liable to repay
the advance, the interest-free benefit on the defaulted amount
and the default interest penalty. In addition, the producer
organization must contact the producer to enter into a repayment
agreement. |
| 11. |
Q. |
What if the producer is unable to repay or does not want to cooperate after being declared in default? |
|
A. |
At this point, AAFC will honour the guarantee and will take the necessary steps to enter into a repayment agreement directly with the producer. |
| 12. |
Q. |
How do defaults affect my chance of receiving a guarantee from AAFC for the next crop year? |
|
A. |
The producer organization's default rate
is one of the criteria that AAFC will use in evaluating the
organization's ability to continue managing the program. |
PRODUCERS
| 13. |
Q. |
Where do I get an application form from? |
|
A. |
Applications are available from
recognized producer organization including the Canadian Wheat
Board, please refer to Participating Organizations on this website to locate a producer organization
near you that represents the type of crop that you are involved
in. It should be noted that there is certain criteria that must
be met in order to be eligible for an advance. These requirements
can be discussed with your producer organization. |
| 14. |
Q. |
When do I repay my advance? |
|
A. |
The advance is to be repaid as the
crop is sold. Producers must repay the advance by December 31
of the same year the advance was received. Otherwise, if eligibility
requirements are met, the producer can roll the spring advance
into the fall Advance Payments Program. For more details on
this option, please contact your producer organization and visit
Advance Payments
Program |
| 15. |
Q. |
How is the eligible advance amount determined? |
|
A. |
The advance is calculated by multiplying
the yield protection provided by crop insurance, based on the
intended seeded acreage, and the advance rate established by
AAFC. This rate would represent 50% of the expected farmgate
price a producer is expected to receive.
Example with Wheat Crop:
|
| 1. |
Yield Protection provided by a Crop Insurance Agency |
|
1 tonne of wheat per acre |
| 2. |
# of acres seeded and covered under crop insurance |
|
150 acres |
| 3. |
Advance rate of Agriculture and Agri-Food Canada |
|
$80.00/tonne |
Calculation: 1 tonne/acre * 150 acres * $80.00/tonne = $12,000
NOTE: THE ADVANCE WILL BE ISSUED IN TWO INSTALMENTS; 60% IS ISSUED ONCE THE PRODUCER QUALIFIES FOR AN ADVANCE. THE REMAINING PORTION IS ISSUED ONCE THE PRODUCER SUPPLIES THE ORGANIZATION WITH A PROOF OF THEIR CROP INSURANCE REPORT CONFIRMING THE SEEDED ACRES.
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