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.
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