Advance Payments Program (APP)

Changes will be implemented in early 2008 to add negative margin coverage under AgriStability as security for the Advance Payments Program (APP). Program officials are engaging with administrators who deliver the APP to livestock producers to ensure that this change can be implemented as soon as possible.

The Advance Payments Program (APP) is a loan guarantee program that gives producers easier access to credit through cash advances up to $400 000 ($100 000 interest-free). Producers can then store their crops until their value rises.

Eligibility Criteria

Producers

To be eligible for a cash advance under the Advance Payments Program (APP), you must be:

• a Canadian citizen or permanent resident;
• a corporation, cooperative or partnership of which the majority interest is held by Canadian citizens or permanent residents.

The producer or one of the producer's individual interest holders must:

• be of the age of majority in the province of operation;
• be principally occupied in farming;
• own the agricultural product;
• be responsible for its marketing.

Producer Organizations

A producer organization is defined as an organization of producers that is involved in marketing an eligible agricultural product or any other organization that the Minister of Agriculture and Agri-Food Canada considers to be supported by producers. To be eligible, a producer organization must demonstrate to the Minister that:

• it can sue and be sued in its own name;
• it represents eligible producers in an area who produce a significant portion of the agricultural products for which the cash advances will be made;
• it is capable of meeting its obligations under the cash advance guarantee agreement.

Eligible Agricultural Products

• crops;
• field crops (including berries);
• fur pelt;
• honey, maple syrup;
• livestock.

These agricultural products must meet the following requirements:

• It must be possible to establish an average market price for the agricultural product.
• The agricultural product must not be processed, except perishable products which must not be processed beyond what is necessary for storage and to prevent spoilage.
• Livestock is not eligible once it has been sent for slaughter. Animals that are or were used as breeding animals or are under supply management (e.g. dairy and poultry) are not eligible.

Summary

The Advance Payments Program guarantees repayment of cash advances issued to farmers by the producer organization. These guarantees help the producer organization borrow money from financial institutions at lower interest rates and issue producers a cash advance on the anticipated value of their farm product that is being produced and/or that is in storage.

The cash advance rate must not exceed 50% of the average market price that the Minister estimates will be payable to producers of the agricultural product in that area. The maximum cash advance is $400 000. A portion of cash advances is interest-free. The federal government pays the interest on the first $100 000 of a cash advance issued to a producer. The producer has until the end of the production period to repay the cash advance or as its agricultural product is sold.

The Spring Credit Advance Program has merged with the Advance Payments Program to form a single program with added benefits for producers.

New Brunswick Contact(s):
See National Contact.

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National Contact(s):
Advance Payments Program
Financial Guarantee Programs Division
Agriculture and Agri-Food Canada
7th Floor, Tower 7
1341 Baseline Road
Ottawa, Ontario  K1A 0C5
Toll-free (information): 1-888-346-2511
E-mail: fgp-pgf@agr.gc.ca
Web site: http://www.agr.gc.ca/index_e.phtml