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

Q1 – Will the increased interest-free limit be extended into 2025? Q2 – How many producers have benefited from the increased interest-free limit?

R.1 - On March 7, 2025, it was announced that the interest-free limit would be temporarily increased to $250,000 for the 2025 program year. R.2 - For the 2024 program year, of the over 21,400 producers who received advances, nearly 12,700 producers benefited from the increased interest-free limit above $100,000, and of these, nearly 6,600 producers were able to maximize the interest-free benefit of $250,000.

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.

The Agricultural Marketing Programs Act (AMPA) governs the APP. The standard interest-free limit of $100,000 is stipulated in both the Act and the Regulations.

On June 23, 2022, the interest-free portion of APP advances was temporarily increased 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 fluctuations, suggest participating producers will save an average of $20,554 in total interest costs, including $10,307 related to the increased interest-free limits, over these two years. The change represents an additional estimated savings of up to $121.8 million over the two years for the over 12,800 producers who took advantage of advances above $100,000.

On March 25, 2024, the interest-free limit was again temporarily increased to $250,000. Approximately 12,700 producers are expected to save an additional $4,125 in interest as a result of the change. This represents a total interest savings of up to $52.3 million for the program year 2024, and a total savings of $174.2 million for producers over the three-year period.

Additionally, on March 7, 2025, it was announced that the interest-free limit was being temporarily increased to $250,000 for the 2025 program year. Participating producers could save on average $5,000 in interest costs. This change will represent estimated savings of up to $65 million for approximately 13,000 producers.

In 2022, the Advance Payments Program provided $3.5 billion in total advances to 18,940 producers across Canada. A total of 9,634 producers were able to benefit from the increase, and of these, 5,122 were able to maximize the $250,000 interest-free benefit.

For the 2023 program year, a total of 21,467 producers (value of $4.5 billion) received advances. A total of 7,504 producers received interest-free advances above $250,000, and of these, 4,950 received the maximum interest-free benefit of $350,000.

The 2024 program year started on April 1, 2024, and 21,472 producers (value of $4 billion) have received advances to date. A total of 12,692 producers have received interest-free advances above $100,000, and of these, 6,580 have been able to maximize the $250,000 interest-free benefit.

• Producers have access to the Advance Payments Program (APP), 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, the Government of Canada increased the interest-free portion of the 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.

• As farmers are facing uncertainties heading into this crop year, the interest-free limit was increased from $100,000 to $250,000 for the 2025 program year. This change is expected to provide additional interest savings of $65 million to approximately 13,000 producers.