The recent decision to reduce the interest-free portion of the Advance Payment Program (APP) from $350,000 to $100,000 has stirred apprehension within the agricultural community across Canada, with the Agricultural Producers Association of Saskatchewan (APAS) issuing numerous concerns.

The Advance Payment Program is a federal loan guarantee initiative that has served as a resource for agricultural producers, providing them access to low-cost cash advances to manage cash flow.

Ian Boxall, president of the Agricultural Producers Association of Saskatchewan (APAS), expressed worry over the decision.

“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,” he said. “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.”

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

APAS notes that the implications of the decision extend beyond financial strain and will have wide-ranging impacts on farm financial management. With smaller interest-free portions, farmers may turn to high-interest loans and credit lines, exacerbating financial challenges already faced by many producers today.

In response to these concerns, APAS and the Saskatchewan Cattlemen’s Association have jointly written to the federal Agriculture Minister, urging the government to reconsider its decision and reinstate the $350,000 interest-free portion of the Advance Payment Program for 2024.

They emphasize that adequate support for farmers is essential for the viability of agricultural businesses and the rural economy and for ensuring a stable and secure food supply for all Canadians.