Livestock Loan Guarantee Program

Background | Cattle Feeder and Breeder Options | Cattle Feeder and Breeder Associations Policy and Procedures Manual | Enhanced Cattle Feeder Option | Sheep Feeder and Breeder Options | Bison Feeder Option | Individual Cattle Feeder Option | Feedlot Construction Option | Information

Updated: March 2006

The program facilitates growth of Saskatchewan ’s livestock industry, including cattle, bison and sheep. The program provides producers with alternative financing options to purchase livestock or construct or expand feedlot facilities. Some producers also use the program as a management tool to generate cash flow through retained ownership of livestock.

Background

• The Production Association Loan Guarantee Program was established in 1984 to facilitate the establishment of cattle feeder associations. The name of the program has since been changed to Livestock Loan Guarantee.
• In 1991 the program was expanded to include five year financing for bred cows and bred heifers.
• In 1999, the program expanded to include feeder and breeder sheep along with feeder bison.
• In 2003, the Enhanced Feeder Option (EFO) was approved for the purchase of feeder animals by associations which include 1 feedlot member and at least 10 individual feeder members.
• In 2003, the Individual Cattle Feeder Option (IFO) was approved for the purchase of feeder cattle by individual producers.
• In 2004, the Feedlot Construction Option was approved to support the construction or expansion of feedlot facilities for feeding of cattle, bison, or sheep.
• In 2006 there were approximately 101 associations with about 4,600 members.

Cattle Feeder and Breeder Options

Producer Benefits Key benefits to the producer include:

• Provides a reliable source of credit at competitive interest rates. Livestock and assurance fund deposit are pledged as loan security. Minimal assurance fund deposit allows members to purchase during times of limited cash flow. Improves cash flow management through retained ownership options.
• Associations are producer-controlled.

Overview

Producers apply for membership in a feeder and/or breeder association or can inquire about starting a new association. Once approved, the association may begin to borrow funds from a lender to purchase feeder or breeder cattle on behalf of the member, subject to the following terms and conditions:

• Members must maintain an assurance fund deposit equal to at least 5 per cent (feeder) or 10 per cent (breeder) of the outstanding loans taken by the association on the member’s behalf. This deposit is refundable, provided it has not been used to offset a loan default.
• Members may sell their own feeder heifers and steers, or bred heifers to the association for fair market value to generate operating capital while maintaining the benefits of ownership (some restrictions apply).
• All cattle purchased by the association on behalf of a member, and any offspring, are owned by the association and must be branded with the association’s registered brand.
• The lender takes security on the cattle purchased by the association and also relies on the association’s assurance fund and a 25 per cent government guarantee.
• Members are responsible for repaying in full any loan(s) taken out by the association on their behalf. Producers continue to be responsible for repayment of loans should a guarantee payment be made to the lender.
• All cattle are sold in the name of the association on behalf of the member. The association makes the required payment on the member’s account and returns any excess to the member.

Government Guarantee

• The Government of Saskatchewan guarantees the lender repayment of 25 per cent of the amount outstanding on loans at the time of first default. In the case of a default after all inventory has been disposed of, the association repays loans from the assurance fund before any payment is made under the government guarantee.

Eligibility

Residents of Saskatchewan who are at least 18 years of age are eligible for the program, subject to association, lender and government approval. Associations and/or lenders may establish additional criteria. Some restrictions apply to membership in more than one association.

Loan Limits and Conditions

Cattle Feeder Option:

• Eligible livestock include feeder heifers, steers and feeder cows.
• Loans for feeder heifers and steers must be repaid within 12 months from the date of purchase or when the cattle are sold, whichever comes first.
• Loans for feeder cows must be repaid within 180 days from the date of purchase or when the cows are sold, whichever comes first.
• The maximum loan limit* per member is:

• The feeder option loan limit is $6,000,00.

Cattle Breeder Option:

• Eligible cattle include pregnant females under 60 months of age and non-pregnant females under 60 months of age with an unweaned calf at foot.
• Breeder loans must be repaid within five years from date of purchase, with 20 per cent annual payments due on the anniversary date or when calves are sold, whichever comes first.
• The maximum loan limit* per member is:

• The breeder option loan limit is $6,000,000.

• Cattle Feeder and Breeder Livestock Loan Guarantee Brochure (pdf)
• Cattle Feeder and Breeder Associations Policy and Procedures Manual (pdf)

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Table of Contents

Enhanced Cattle Feeder Option

The Enhanced Cattle Feeder Option (EFO) facilitates investment in the cattle feeding sector through producer associations consisting of one feedlot operator and at least 10 individual producers. The association borrows money on the strength of its assurance fund and a government guarantee to the lender, and uses the funds to purchase feeder cattle jointly on behalf of its members on a pro-rata basis. All association cattle are fed at the feedlot member’s facilities.

Producer Benefits

Key benefits to the producer include:

• Provides feedlot operators and individual producers with an alternate source of credit at competitive interest rates.
• Minimal assurance fund deposit allows members to purchase during times of limited cash flow.
• Livestock and assurance fund deposit are pledged as loan security.
• Improves cash flow management through retained ownership options.
• Associations are producer-controlled.

Overview

• Interested groups consisting of one feedlot operator and at least 10 individual producers contact the LLG program for assistance in setting up an enhanced feeder association.
• Once established, the association may begin to borrow funds from a lender to purchase feeder cattle on behalf of members.
• Producers may apply for membership in the association on an ongoing basis, subject to association, lender and government approval.
• Members may sell their own feeder heifers and steers to the association at fair market value to generate operating capital while maintaining the benefits of ownership.
• Individual members must maintain an assurance fund deposit equal to at least 5 per cent of the loans taken by the association on the member’s behalf.
• The feedlot member must maintain an assurance fund deposit equal to at least 10 per cent of the loans taken by the association on the member’s behalf.
• Assurance fund deposits are refundable, provided they have not been used to offset a loan default.
• All association cattle are fed at the facilities of the feedlot member.
• All cattle purchased by the association on behalf of its members are owned by the association and must be branded with the association’s registered brand.
• All cattle purchased by the association are owned jointly on behalf of all participating members, including the feedlot member, based on each member’s pro-rata share of the loan(s).
• Members are individually responsible for the cost of feeding and caring for the association cattle and for repaying their pro-rata share of the loan used to purchase the cattle. Producers continue to be responsible for repayment of loans should a guarantee payment be made to the lender.
• The lender takes security on the cattle purchased by the association, and also relies on the association’s assurance fund and a 25 per cent government guarantee. In some cases, personal guarantees from corporate shareholders are required.
• All cattle are sold in the name of the association on behalf of the member. The association makes the required payment on the member’s account and returns any excess to the member.

Government Guarantee

The Government of Saskatchewan guarantees the lender repayment of 25 per cent of the amount outstanding on loans at the time of first default. In the case of a default after all inventory has been disposed of, the association repays loans from the assurance fund before any payment is made under the government guarantee.

Eligibility

Individual Members:  

Residents of Saskatchewan who are at least 18 years of age are eligible to participate in the EFO as individual members, subject to association, lender and government approval.

Feedlot Member:  

The feedlot member may be any producer (subject to the criteria outlined above) or corporation in Saskatchewan who carries on a feedlot operation.

• Corporations must verify their current corporate and financial status.

Loan Limits and Conditions

• Eligible cattle include feeder heifers and steers, and feeder cows.
• Loans for feeder heifers and steers must be repaid within 12 months from the date of purchase, or when the feeders are sold, whichever comes first.
• Loans for feeder cows must be repaid within 180 days from the date of purchase, or when the cows are sold, whichever comes first.
• The maximum loan limit per individual feeder member, subject to association, lender and government approval, is:

	1st year - $50,000 2nd and 3rd years - $100,000 4th and 5th years - $150,000 6th and following years - $200,000

• Producers may join only one enhanced feeder association; however, if a member chooses to participate in both an enhanced feeder association and a conventional feeder association, the member’s maximum loan eligibility is shared between the two associations.
• The maximum loan limit for the feedlot member is equal to the cumulative loan limit for all the individual members of the association.
• The maximum loan limit per enhanced feeder association is $6,000,000.

Enhanced Cattle Feeder Livestock Loan Guarantee Brochure (pdf)

Table of Contents

Sheep Feeder and Breeder Options

Under the Sheep Feeder and Breeder Options, Saskatchewan residents establish production associations for the purpose of purchasing feeder and/or breeder sheep on behalf of association members. The association borrows money on the strength of its assurance fund and a government guarantee to the lender, and uses the funds to purchase feeder sheep or female breeding sheep to be fed or pastured on members’ farms, or in custom feedlots or pastures on behalf of members.

Producer Benefits

Key benefits to the producer include:

Provides a reliable source of credit at competitive interest rates. Livestock and assurance fund deposit are pledged as loan security Minimal assurance fund deposit allows members to purchase during times of limited cash flow. Improves cash flow management through retained ownership options. Associations are producer-controlled.

Overview

Producers apply for membership in the provincial feeder and/or breeder association. Once approved, the association may begin to borrow funds from the lender to purchase feeder or breeder sheep on behalf of the member, subject to the following terms and conditions:

• Members must maintain an assurance fund deposit equal to at least 5 per cent (feeder) or 10 per cent (breeder) of the outstanding loans taken by the association on the member’s behalf. This deposit is refundable, provided it has not been used to offset a loan default.
• Members may sell their own feeder ewe lambs or wethers, or ewe lambs for breeding to the association for 75 per cent of fair market value to generate operating capital while maintaining the benefits of ownership (some restrictions apply).
• All sheep purchased by the association on behalf of a member, and any offspring, are owned by the association and must be marked with the association’s registered mark and carry a unique ear tag registered to the association.
• The lender takes security on the sheep purchased by the association and also relies on the association’s assurance fund and a 25 per cent government guarantee.
• Members are responsible for repaying in full any loan(s) taken out by the association on their behalf. Producers continue to be responsible for repayment of loans should a guarantee payment be made to the lender.
• All sheep are sold in the name of the association on behalf of the member. The association makes the required payment on the member’s account and returns any excess to the member.

Government Guarantee

The Government of Saskatchewan guarantees the lender repayment of 25 per cent of the amount outstanding on loans at the time of first default. In the case of a default after all inventory has been disposed of, the association repays loans from the assurance fund before any payment is made under the government guarantee.

Eligibility

Residents of Saskatchewan who are at least 18 years of age are eligible for the program, subject to approval from the association, lender and government. The association and/or lender may establish additional criteria.

Loan Limits and Conditions

Feeder Option:

• Eligible livestock include feeder wethers and feeder ewe lambs.
• Feeder loans must be repaid within 6 months from the date of purchase, or when the feeders are sold, whichever comes first.
• The maximum loan limit* per member is $25,000.
• The maximum loan limit per feeder association is $4,000,000.

Breeder Option:  

• Eligible livestock include pregnant females under four years of age and non-pregnant females under four years of age with a lamb(s) at foot.
• Breeder loans must be repaid within four years from the date of purchase, with 25 per cent annual payments due on the anniversary date, or when the lambs are sold, whichever comes first.
• The maximum loan limit* per member is $25,000.
• The maximum loan limit per breeder association is $4,000,000.

Sheep Feeder and Breeder Livestock Loan Guarantee Brochure(pdf)

Table of Contents

Bison Feeder Option

Under the Bison Feeder Option, Saskatchewan residents establish production associations for the purpose of purchasing bison feeder animals on behalf of association members. The association borrows money on the strength of its assurance fund and a government guarantee to the lender, and uses the funds to purchase bison feeder animals to be fed or pastured on members’ farms, or in custom feedlots or pastures on behalf of the members.

Producer Benefits

Key benefits to the producer include:

• Provides a reliable source of credit at competitive interest rates.
• Livestock and assurance fund deposit are the only required loan security.
• Minimal assurance fund deposit allows members to purchase during times of limited cash flow.
• Improves cash flow management through retained ownership options.
• Associations are producer-controlled.

Overview

Producers apply for membership in a bison feeder association or can inquire about starting a new association. Once approved, the association may begin to borrow funds from a lender to purchase feeder bison on behalf of the member, subject to the following terms and conditions

• Members must maintain an assurance fund deposit equal to at least 5 per cent of the outstanding loans taken by the association on the member’s behalf. This deposit is refundable, provided it has not been used to offset a loan default.
• Members may sell their own bison feeder heifers and bulls to the association for 75 per cent of fair market value to generate operating capital while maintaining the benefits of ownership (some restrictions apply).
• All bison purchased by the association on behalf of individual members are owned by the association and must be tagged with the association’s registered ear tag, a Federal Health of Animals ear tag, and a Canadian Cattle Identification Agency ear tag.
• The lender takes security on the bison purchased by the association, and also relies on the association’s assurance fund and a 25 per cent government guarantee.
• Members are responsible for repaying in full any loan(s) taken out by the association on their behalf. Producers continue to be responsible for repayment of loans should a guarantee payment be made to the lender.
• All bison are sold in the name of the association on behalf of the member. The association makes the required payment on the member’s account and returns any excess to the member.

Government Guarantee

The Government of Saskatchewan guarantees the lender repayment of 25 per cent of the amount outstanding on loans at the time of first default. In the case of a default after all inventory has been disposed of, the association repays loans from the assurance fund before any payment is made under the government guarantee.

Eligibility

Residents of Saskatchewan who are at least 18 years of age are eligible for the Bison Feeder Option, subject to association, lender and government approval. Associations and/or lenders may establish additional criteria.

Loan Limits and Conditions

Bison Feeder Option:  

• Eligible livestock include bison feeder bulls and feeder heifers under two years of age.
• Loans must be repaid within 18 months from the date of purchase, or when the bison are sold, whichever comes first.
• The maximum loan limit* per member is:

• The maximum loan limit per feeder association is $5,000,000.

Bison Feeder Livestock Loan Guarantee Brochure(pdf)

Table of Contents

Individual Cattle Feeder Option

The Individual Cattle Feeder Option (IFO) provides producers with a financing option for the purchase of feeder cattle, up to a maximum loan of $3,000,000. Each producer borrows money on the strength of their business and supported by their individual assurance fund, a provincial assurance fund, and a government guarantee to the lender. The producer uses the funds to purchase feeder heifers and steers to be fed and cared for at his/her feedlot facility.

Producer Benefits

Key benefits to the producer include:

• Provides a source of credit at competitive interest rates.
• Minimal assurance fund deposit allows producers to purchase cattle during times of limited cash flow.
• Provides lenders with additional security by way of a provincial assurance fund and a government guarantee.

Overview

• Producers apply to a lender(s) to obtain financing to purchase feeder cattle under the IFO.
• The lender reviews the producer’s financial information to determine the level of financing offered.
• The producer purchases a membership in the Provincial Feeder Co-operative Ltd., which provides centralized administrative services for IFO members.
• The LLG program reviews the producer’s financial information, completes an assessment of the facilities, and approves or rejects the application for a guarantee.
• The producer must maintain an individual assurance fund deposit with the lender equal to at least 9.5 per cent of the loans taken by the producer to purchase feeder cattle. This deposit is refundable, provided it has not been used to offset a loan default.
• The producer is required to deposit 0.5 per cent of the value of the cattle purchased into a non-refundable provincial assurance fund.
• All animals must be fed at the producer’s own feedlot facilities.
• All cattle purchased by the producer must be branded with the brand registered jointly to the producer and the lender.
• The lender takes security on the cattle purchased and also relies on the producer’s individual assurance fund, the provincial assurance fund, and a 25 per cent government guarantee. In some cases, personal guarantees from corporate shareholders are required.
• All cattle are sold in the name of the producer and the lender.
• When cattle are sold, the lender makes the required principal and interest payments on the producer’s account and returns any excess to the producer.
• Producers continue to be responsible for repayment of loans should a guarantee payment be made to the lender.

Government Guarantee

The Government of Saskatchewan guarantees the lender repayment of 25 per cent of the amount outstanding on loans at the time of first default. In the case of default after all inventory has been disposed of, the lender draws first on the producer’s individual assurance fund and the provincial assurance fund, prior to claiming on the government guarantee.

Eligibility

• Individuals and corporations who operate feedlots in Saskatchewan are eligible to participate in the IFO, subject to lender and government approval.
• Individuals must be residents of Saskatchewan who are at least 18 years of age.
• Corporations must verify their current corporate and financial status.
• Producers who participate in the IFO cannot belong to any other feeder association or enhanced feeder association.

Loan Limits and Conditions

• Eligible cattle include feeder heifers and steers.
• Individual loan limits for producers are established by the lender and approved by the LLG program for a minimum of $500,000 and up to a maximum of $3,000,000.
• Loans must be repaid within 12 months from the date of purchase, or when the feeders are sold, whichever comes first.

Individual Cattle Feeder Livestock Loan Guarantee Brochure(pdf)

Table of Contents

Feedlot Construction Option

The Feedlot Construction Option supports the expansion of Saskatchewan's cattle feeding sector by providing loan guarantees to lenders that finance the construction or expansion of feedlot facilities for feeding of cattle, bison or sheep.

This Option compliments the existing Association Options and Individual Option for the purchase of livestock.

Key Benefit to Producers

The Feedlot Construction Option provides producers with access to a source of capital at competitive interest rates.

Loan Purpose

Loans advanced under the Feedlot Construction Option are used to cover costs associated with a feedlot's construction or expansion.

Eligible costs include:

• site improvements
• building materials
• equipment to be permanently attached to the feedlot site or building
• labour associated with the construction.

Loan Limit

A producer's approved loan limit is negotiated with the producer's lender and approved by Saskatchewan Agriculture and Food, subject to the following conditions:

• The minimum loan provided is $50,000.
• Producers can negotiate with a lender for a loan limit in excess of $3 million; however, the maximum guarantee provided on an eligible loan is $750,000.

Loan Term

While the government guarantee under the Feedlot Construction Option is limited to a 10 year term, producers are free to negotiate with their lenders for a longer loan term.

Conditions of Repayment

Loans are repaid by regular installments, with the date of first payment and the frequency of repayment installments negotiated between the producer and the lender, and approved by Saskatchewan Agriculture and Food.

Producers continue to be responsible for repaying a loan, even if a guarantee payment is made to the lender.

Security

Security for the loan is negotiated between the feedlot, the lender and Saskatchewan Agriculture and Food, and may include:

• a land mortgage on the feedlot property, including the feedlot;
• a General Security Agreement and/or Bank Act Security; and
• personal guarantees (in the case of a feedlot corporation).

Government Guarantee

The Government of Saskatchewan guarantees the lender repayment of 25 per cent of the amount outstanding on an eligible loan at the time of first default plus any accrued interest, up to a maximum payment of $750,000.

Producer Eligibility

Individuals, corporations and Indian Bands that operate feedlots in Saskatchewan are eligible to participate in the Feedlot Construction Option, subject to lender and Saskatchewan Agriculture and Food approval.

To be eligible:

• individuals must be Saskatchewan residents who are at least 18 years of age; and
• corporations, including co-operatives, must be registered in Saskatchewan.
  

Feedlot Construction Option, Livestock Loan Guarantee Program Brochure (PDF 50 kb )

For more information, contact:

Financial Programs Branch
Saskatchewan Agriculture and Food
Room 329, Walter Scott Building
3085 Albert Street
Regina, SK S4S 0B1
Phone: (306) 787-5275
Fax: (306) 798-3042

or the

Saskatoon Regional Office
3830 Thatcher Avenue
Saskatoon, SK S7K 2H6
Phone: (306) 933-5745
Fax: (306) 933-6729