Advance Payments Program

The Advance Payments Program (APP) improves cash-flow at or after harvest. A cash advance at this critical time allows the producer to store the crop and sell it throughout the crop year to achieve higher returns. The program is easily accessible through the farmer’s producer organization which administers the APP through an agreement with the federal government.

The APP guarantees the repayment of the advances made to farmers by the producer organization. These guarantees help the producer organization to borrow money from lenders at lower interest rates. The organization can then issue producers an advance on the value of their crop once the crop is in storage.

All crops storable in their natural state, as well as ranch-raised fur, honey, and maple syrup are eligible under the APP. The amount of the cash advance is based on half (50%) of the expected farm gate price of the crop in storage, with the maximum advance being $250,000. The federal government pays the interest on the first $50,000 of an advance issued to a producer. The maximum period the advance can be held is one year.

The producer organization is responsible for ensuring that the cash advance is repaid as the crop is sold. The organization is liable for a portion of any repayment defaults that occur. In order to cover its operational costs, the organization may charge participating producers an administration fee.

Many producers may already be familiar with the APP as the program essentially amalgamated two acts and one program, namely - the Advance Payments for Crops Act (APCA), the Prairie Grain Advance Payments Act (PGAPA) and the Cash Flow Enhancement Program (CFEP).