Question Period Note: ADVANCE PAYMENTS PROGRAM INCREASES TO INTEREST-FREE LIMITS TO SUPPORT PRODUCERS

Q1 – Will the increased interest-free limit be extended into 2024? Q2 – How many producers have benefited from the increased interest-free limit?

R1 - The interest-free limit is scheduled to return to $100,000 for the 2024 program year. However, program staff continue to assess the program to ensure that it is meeting the needs of our producers. R2 - For the 2023 program year to date, of the close to 19,000 producers who have received advances, over 5,300 producers benefited from the increased interest free limit above $250,000, and of these, almost 4,000 producers were able to maximize the interest free benefit of $350,000.

The Advance Payments Program (APP) is a federal loan guarantee program that provides Canadian farmers with low-interest cash advances to increase marketing flexibility. The objective of the APP is to provide farmers with temporary cash flow in the form of APP advances so that they can meet their immediate financial obligations until they are able to sell the products they grow. APP cash advances are calculated based on up to 50% of the anticipated market value of the eligible agricultural products that a producer will produce or has in storage, up to $1,000,000 in total. The Government of Canada pays the interest on a portion of each advance.
On June 23, 2022, Minister Bibeau announced an increase to the interest-free portion of APP advances from $100,000 to $250,000 for the 2022 and 2023 program years. Budget 2023 proposed to further increase the interest-free limit from $250,000 to $350,000 for the 2023 program year. As a result, recent estimates, which take into consideration interest rate increases, suggest participating producers will save an average of $8,600 in interest costs over these two years. The change represents an additional estimated savings of up to $84 million over the two years for the approximately 11,000 producers who take advantage of advances above $100,000.
In 2022, the Advance Payments Program provided $3.5 billion in total advances to 18,721 producers across Canada. A total of 9,512 producers were able to benefit from the increase, and of these, 5,069 were able to maximize the benefit at $250,000 interest free.
For the 2023 program year to date, a total of 18,599 producers (value of $3.8 billion) have received advances. A total of 5,347 producers received interest free advances above $250,000, and of these, 3,909 received the maximum interest free benefit of $350,000.

• Producers have access to the Advance Payments Program, a federal loan guarantee program which provides easy access to low-interest cash advances, helping producers meet their financial needs.
• In light of high input costs and increased interest rates, we increased the interest-free portion of APP advances from $100,000 to $250,000 for the 2022 program year and further increased the limit to $350,000 for the 2023 program year.
• This change represents additional savings of up to $84 million over these two years for the approximately 11,000 producers who take advantage of advances above $100,000.