Agriculture and Agri-Food Canada

Agriculture and Agri-Food Canada

October 27, 2005 11:00 ET

AAFC: Proposed Amendments to the Advance Payments Program to Benefit the Majority of Producers

OTTAWA, ONTARIO--(CCNMatthews - Oct. 27, 2005) - Amendments to the Agricultural Marketing Programs Act (AMPA), introduced today in the House of Commons, would provide an enhanced cash advance tool to Canadian producers to assist them to operate profitably in the short and long term.

The proposed amendments would expand coverage to include producers of most agricultural products, including livestock and storable crops such as blueberries and cranberries, and increase the amount of cash advances, including the interest-free component of those advances, available to producers. As well, the proposed amendments would consolidate the Advance Payment Program (APP) and the Spring Credit Advance Program (SCAP) under the Act.

"By responding to current realities of agricultural producers, we are proposing to allow a broader range of products and larger advances to help ensure greater stability in the operation of many farms across the country," said Agriculture and Agri-Food Minister Andy Mitchell. "Measures to streamline the programs will also make it easier for producers to access available benefits."

The amended APP will continue to provide producers with interest-free loans at optimal times in the specified 18-month production period. Advances can be obtained during the spring when farmers are experiencing input costs related to producing the agricultural product and, at or after harvest to relieve cash flow difficulties until the product is marketed. The advances will also allow the producers to store or hold their agricultural product, and sell it throughout the production period when marketing opportunities may provide greater returns to the producer.

Budget 2005 allocated $26 million per year over four years to include livestock in AMPA. The proposed legislation goes further, adding storable crops to the list of eligible agricultural products and providing greater interest-free coverage.

The proposed amendments respond to recommendations of an evaluation of the AMPA, tabled in Parliament in April 2004, and further developed following consultation with the industry.



BACKGROUNDER

PROPOSED AMENDMENTS TO ADVANCE PAYMENTS PROGRAM (APP) UNDER THE
AGRICULTURAL MARKETING PROGRAMS ACT (AMPA)


Agriculture and Agri-Food Canada currently operates two cash advance programs, the Advance Payment Program (APP) and the Spring Credit Advance Program (SCAP). The two programs are complimentary to each other, providing producers with interest-free loans, secured by Production Insurance or the value of harvested crops, at optimal times in the production cycle. The cash advance programs support the Business Risk Management (BRM) component of the Agricultural Policy Framework (APF), whose objectives are to improve long-term growth and income prospects.

On October 27, 2005, proposed amendments to the Advance Payments Program under the Agricultural Marketing Programs Act (AMPA) were introduced in Parliament to broaden accessibility for producers, to increase the level of coverage under the programs, and to consolidate the APP and the SCAP under the APP.

Broadening accessibility

Coverage under these programs is currently restricted to field crops, maple syrup, fur, and honey. The proposed amendments would expand coverage to include most agricultural products, including livestock and storable crops (such as blueberries and cranberries), broadening accessibility to these programs to most producers in Canada.

Increasing the level of coverage

The proposed amendments would result in significant increases in coverage levels. This would allow producers to more adequately address increases in expenditures that have risen significantly in the past decade. Specifically,



- the interest-free component of the APP advance loans would
increase from $50,000 to $60,000
- the overall limits on advances would rise to $300,000 from
$250,000; and
- the emergency cash advance provision will be broadened to cover
additional agricultural products

Consolidating the programs

Currently, the two programs (APP and SCAP) are administered
separately. Following a government-led evaluation and industry
consultation, it was found that although many elements of the
programs worked well, some changes were needed to address the current
challenges faced by producers. Specifically, these changes involve:

- merging the SCAP into the APP under the AMPA;
- including livestock and most other agricultural products in the
program; and
- increasing the amount of cash advances, including the interest-
free component of those advances.


The proposed amendments would help to align the APP more closely with the Agricultural Policy Framework by supporting long-term growth and income prospects, and by ensuring that all farmers facing cash flow pressures are treated equally. The increases in the advance maximum levels would also bring the program more in line with the higher level financial commitments of today's farming enterprises.

www.agr.gc.ca

Contact Information

  • Agriculture and Agri-Food Canada
    Media Relations
    (613) 759-7972
    1-866-345-7972
    or
    Minister Mitchell's office
    Matt Tolley
    (613) 759-1059