Interest-free portion of APP back at $250,000 for 2024

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Glacier FarmMedia — The interest-free portion of the federal Advance Payments Program (APP) will be $250,000 this year, much to farmers’ relief.

Producers had asked for the amount to be raised after learning in late February it would change.

The announcement is a “welcome relief to farm businesses across Ontario and Canada,” the Ontario Federation of Agriculture (OFA) said in a statement.

“The Advanced Payments Program is an important tool in the toolbox for farmers across the country to access short-term financing for their farm business,” said Drew Spoelstra, OFA president.

The APP offers $1 million to producers of 500 crop and livestock products who can borrow against expected production or produce in storage. The advances are based on up to 50 per cent of anticipated market value of those products.

In 2022, the government raised the interest-free portion to $250,000 and then again to $350,000 last year to deal with high interest rates and volatility.

The federal government said farm operating costs remain uncertain, and raising the interest-free portion would save 11,950 producers an extra $4,916 in interest costs, on average.

The total savings for producers is estimated at $58.7 million.

Support at the beginning of the production cycle allows farmers to buy inputs for the growing season. It also provides some marketing flexibility as producers can sell when it’s best rather than because they need cash.

At the Canadian Federation of Agriculture annual meeting earlier this year, MacAulay had told producers he couldn’t grant their wish for a higher limit but the finance minister might be able to.

The Canadian Cattle Association had asked for the limit to remain at $350,000 but said $250,000 was a good step.

President Nathan Phinney said the APP is a useful tool, and a higher interest-free portion is a relief.

“This sustained increase comes at a time when producers need all economic levers at their disposal to increase food security and economic competitiveness,” he said.

CCA had said the lower limit was “untenable as it does not account for farmers’ current realities.”

“By maintaining the increase to interest-free portion of loans under APP, the federal government can demonstrate it recognizes the needs of producers — across commodities and across the country — who have been facing escalating input costs,” the association said in February.

Grain Growers of Canada also applauded the decision.

Chair Andre Harpe said it would support thousands of grain farmers across the country.

“With the rising cost of inputs and low grain prices at harvest, a higher interest free portion of the APP is needed,” he said.

The GGC said announcing this decision early provides farmers with predictability and stability so they can plan their year ahead.