To be eligible to receive a cash advance under the Advance Payments Program (APP), the producer must be:
- a Canadian citizen or permanent resident;
- a corporation, cooperative or partnership of which the majority interest is held by Canadian citizens or permanent residents
In addition, the producer or one of the producer's individual interest holders:
- must be of the age of majority in the province of operation;
- must be principally occupied in farming;
- must own the agricultural product;
- must be responsible for its marketing
A producer organization may apply to become an administrator of the APP. A producer organization is defined as an organization of producers that is involved in marketing an eligible agricultural product or any other organization that the Minister considers is supported by producers. To become an administrator, a producer organization must demonstrate to the Minister that:
- it can sue and be sued in its own name;
- it represents eligible producers in an area who produce a significant portion of the agricultural products for which the cash advances will be made;
- it is capable of meeting its obligations under the cash Advance Guarantee Agreement.
- livestock (cattle, hogs, sheep, bison);
- other animals (lamb and goats);
- grains and oilseeds;
- fruits and vegetables;
- fur pelt;
- honey, maple syrup, tobacco
These agricultural products must meet the following requirements:
- it must be possible to establish an average market price for the agricultural product;
- the agricultural product must not be processed, except perishable products which must not be processed beyond what is necessary for storage and to prevent spoilage;
- livestock is not eligible once it has been sent for slaughter;
- animals that are or were used as breeding animals or are under supply management (for example, dairy and poultry) are not eligible
How to Apply
Cash advances are issued by producer organizations on behalf of Agriculture and Agri-Food Canada (AAFC). Please refer to Participating Producer Organizations on this Web site to locate a producer organization near you that offers cash advances. The contacts at the producer organizations will be able to guide you through the process of submitting an application for a cash advance under the APP.
Business Risk Management Programs as security for the Advance Payments Program
When a producer applies for a cash advance through the Advance Payments Program (APP), the producer must have a way to ensure repayment or security on the advance. To secure the advance, the producer must cede first rank on the product itself, or must assign his/her Business Risk Management (BRM) program payments to the producer organization delivering the program. Eligible BRM programs include Production Insurance (PI), AgriStability, or any other similar program approved by the Minister, such as the Farm Income Stabilization Insurance (ASRA) program in Quebec.
For agricultural products in storage and livestock (cattle, hog bison & sheep as defined in the Agricultural Marketing Products Act), the product itself will be used as security. However, livestock producers must still participate in a BRM program such as AgriStability (or ASRA in Quebec). The BRM program payments only go towards paying off their advances if the producer goes into default.
For non-storable agricultural products or those in production, BRM programs must be used as security.
If the producer participates in Production Insurance (PI), the producer must use PI as security before any other BRM program (s). The producer must provide evidence that he/she is a PI participant (PI contract). If the agricultural product for which the producer would like a cash advance is not covered by the producer's PI contract, the producer may use another BRM program as security.
AgriStability can only be used as security when the agricultural product on which the cash advance is requested is not covered by the producer's PI contract.
If the producer wishes to use AgriStability as security against a cash advance, the producer must first have a valid AgriStability account and a valid AgriStability reference margin. In the case of livestock producers, the producer must provide evidence that he/she is an AgriStability participant (that is, Options Notice).
For more information on becoming an APP administrator on behalf of AAFC, please contact an AAFC Financial Guarantee Programs Division program manager at 1-866-367-8506.
Repayment of cash advances
The cash advance must be repaid within the production period noted in the producer’s repayment agreement (generally 18 months, running from April to September of the following year). For example:
- If the producer receives a cash advance in April 2008, the producer will have 18 months to repay the advance by September 2009.
- If the producer receives an advance in February 2009, the producer will have 8 months to repay the advance by September 2009.
The producer has to repay the cash advance as the agricultural product is sold and must provide proof of sale. In the case of production loss, the program payments received from PI or AgriStability will be applied to repay the advance.
PI payments will be used first to reduce an outstanding cash advance from APP, however, a Reseeding Benefit payment may be used to reseed your acreage if the producer organization can verify that the producer has enough time to reseed.
If the producer is an AgriStability participant, any payments from AgriStability must be used to reduce an outstanding cash advance from APP.
If the producer defaults on the advance the producer may be ineligible for future advances and are liable to repay the amount of the outstanding advance plus the applicable interest at a penalty rate.
For more information, call toll free 1-866-367-8506 or contact your Participating Producer Organization.
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