Ag Groups Call for Return of Higher Interest-Free Portion on Loan Program

Feb 22, 2024

A pair of Saskatchewan farm groups are calling on the federal government to reinstate the higher limit on the interest-free portion of the Advance Payment Program for 2024.

The Agricultural Producers Association of Saskatchewan as well as the Saskatchewan Cattlemen’s Association have written a joint letter to federal Agriculture Minister Lawrence MacAulay seeking a return to the upper limit of $350,000 for the interest-free portion of the program. The maximum total advance available is $1 million.

Originally set at $100,000, the upper limit on the interest-free portion was raised by Agriculture Canada to $250,000 in 2022 and to $350,000 in 2023 due to rising interest rates and input costs. But for the 2024 growing season, the interest-free portion has been returned to $100,000.

According to APAS, the $250,000 reduction in the interest-free portion could translate to an additional estimated $30,000 for farmers to cover interest costs, representing more than three times the burden compared to 2021.

The implications of this decision extend far beyond financial strain and will have wide-ranging impacts on farm financial management, APAS said in a release Tuesday. With smaller interest-free portions, farmers may turn to high-interest loans and credit lines, exacerbating financial challenges already faced by many producers today.

“It’s been three years since the APP interest-free portion was at $100,000, and interest rates have skyrocketed, grain prices have dramatically declined, and input prices have remained high,” said APAS President Ian Boxall. “The program needs to reflect the current realities of farm and ranch operations. Our margins are tighter today than two years ago when the amount was increased due to rapidly increasing input costs.”

Returning the interest-free limit to $100,000, is a “short-sighted decision that fails to acknowledge the persisting challenges faced by farmers,” Boxall added.

The Advance Payment Program, a federal loan guarantee initiative, has long been a crucial lifeline for agricultural producers, offering them reliable access to low-cost cash advances to manage cash flow and navigate the uncertainties inherent in agriculture.

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Video: Residue Management

Residue Management conservation practice manages the amount, orientation, and distribution of crop and other plant residue on the soil surface year-round while limiting soil-disturbing activities used to grow and harvest crops in systems where the field surface is tilled prior to planting. This video explores how Ryan McKenzie implemented this conservation practice on his farm in Samson, Alabama.

Practice benefits:

• Increases organic matter

• Improves air quality

• Decreases energy costs

• Reduces erosion

• Improves soil health

The Conservation at Work video series was created to increase producer awareness of common conservation practices and was filmed at various locations throughout the country. Because conservation plans are specific to the unique resource needs on each farm and also soil type, weather conditions, etc., these videos were designed to serve as a general guide to the benefits of soil and water conservation and landowners should contact their local USDA office for individual consultation.