![Advance Payments Program (APP) - Overview](/web/20061210174703im_/http://agr.gc.ca/misb/nmp/images/section_overview_e.gif)
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).