Information for producers applying to the Farm Debt Mediation Service (FDMS) with an outstanding advance(s) under the Advance Payment Program (APP)

Important information

FDMS 5(1)(a) or FDMS 5(1)(b) Applications where there are Outstanding APP Advances

As a result of amendments to the Agricultural Marketing Programs Act (AMPA) which came into force in 2015, should your request for mediation and a stay of proceedings under either Section 5(1)(a) or 5(1)(b) of the Farm Debt Mediation Act (FDMA) be approved, all outstanding balances on Advance Payment Program (APP) advances granted to you will no longer automatically be declared in default. However, no additional advances can be granted to you until the FDMS process has been completed.

This is in accordance with the terms and conditions of the Repayment Agreement(s) which you signed with your APP administrator(s) when you applied for your advance(s).

FDMS and Conditions for APP Default

You will only go into default if you register for FDMS and you have not met all of your obligations under your APP Repayment Agreement(s).

With respect to what is proposed through the FDMS process, you will only be declared in default for your APP advance(s) if your Financials and Recovery Plan proposes:

  1. Less than 100% repayment of your APP advance(s) or
  2. Putting the security on your APP advance(s) in jeopardy or
  3. Offering 100% repayment of your APP advance(s), but not until after the end of the production period(s) for which you received your advance(s)

As long as you continue to meet the terms of your APP Repayment Agreement(s) and your FDMS Financials and Recovery Plan does not propose one or a combination of the above, you will not be placed in default for all of your outstanding APP advance(s).

If you do go into default for your APP advance(s), it is important that you understand that your APP Repayment Agreement stipulates that default interest penalty will be payable.

APP Creditors and the FDMS Process

The creditor(s) for your outstanding APP advance(s) should participate in the FDMS mediation process, including analyzing any proposal made as part of the process and its potential impact on your outstanding APP advance(s) and attending the mediation meeting.

With respect to your outstanding APP advance(s), the creditor(s) participating in the FDMS mediation process will be either:

  • the APP administrator(s) with which you have the outstanding advance(s) or
  • Agriculture and Agri-Food Canada’s (AAFC) Collection Unit for APP advances which have been paid under the APP guarantee

Financials and Recovery Plans offering full repayment of all outstanding APP advance(s). Any Financials and Recovery Plan which does not offer a full repayment of all outstanding APP advance(s) must be referred to AAFC’s Collection Unit for approval. As such, determining early on whether or not you will be able to fully repay your outstanding APP advance(s) will accelerate the mediation process.

Amendments to the Farm Debt Mediation Act, which were brought into force in 2015, now allow AAFC to be notified of a producer’s acceptance under FDMS where that producer has an outstanding APP advance(s), as the Minister is the guarantor for the advance(s). This means that you will no longer be required to sign a consent form to allow AAFC to be notified of your acceptance under FDMS and to allow the sharing of your APP file and documentation prepared as part of the mediation process, including your FDMS Financials and Recovery Plan, with AAFC and your APP administrator(s).

This will help to ensure that:

  • FDMS is aware of the status of your outstanding APP advance(s), whether or not you are in APP default, and who is currently the creditor(s) for your outstanding advance(s)
  • Your APP administrator(s) and AAFC’s Collection Unit are able to analyze any proposal made as part of the mediation process and its potential impact on your outstanding APP advance(s)
  • Your APP administrator and AAFC’s Collection Unit are able to determine who will be attending the FDMS mediation meeting, and ensure that the party has time to prepare for the meeting

Should you decide to withdraw from the FDMS process or if no agreement is reached through the FDMS process, you will still be able to negotiate repayment of your outstanding APP advance(s) with your creditor(s) (that is, your APP administrator(s) or AAFC’s Collection Unit). Where your FDMS application included a stay of proceedings, you would need to wait for the stay to be lifted by the FDMS.

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