Cash flow solutions for farmers

March 16, 2018

The Agriculture and Agri-Food Canada Advance Payments Program (APP) helps agricultural producers access low-interest financing throughout the year to improve their cash flow.

Cash advances can help farmers make decisions about selling their products based on market conditions (rather than on the need for cash flow) by helping them meet their short term financial obligations, such as farm input or product marketing costs.

Applicants can receive up to $400,000, with the interest on the first $100,000 paid by the federal government, and repayment terms of 12 to 24 months.

To be eligible for a spring pre-harvest advance, farmers must be participating in a Business Risk Management (BRM) program like AgriStability or AgriInsurance.

Producers can receive advances related to a wide variety of agricultural products, from grains and oilseeds, to tree fruit and horticulture, to livestock and breeding operations. They repay their advances as they sell their products.

Mixed farms can apply for advances on multiple commodities. For example, if you are a honey producer, you would access an advance based on your expected harvest. Here is a sample calculation based on the expectation of 300,000 pounds of honey:

• 300,000 pounds at $0.80 per pound would mean a $240,000 cash advance
• $100,000 of that amount is interest-free (paid by the Government of Canada)
• the remaining $140,000 is interest-bearing at a rate of 3.2%, resulting in $4,480 payable in interest
• the annualized interest rate for the cash advance is 1.87%

Initially, 60% of the advance ($180,000) is paid based on anticipated production. The remaining 40% of the advance ($120,000) is paid when production is confirmed.

APP advances are available through more than 40 producer organizations across Canada. For more information, visit the Advance Payments Program page.