Financial help offered to Canadian pig producers
The Canadian Pork Council has been working with the federal government to address the difficult economic conditions facing pig producers.
One program the federal government offers is the Advance Payments Program (APP) which provides immediate short term cash advances to producers.
Outlined below are the key elements of the program. This may help determine if the APP could help producers manage through the current cash crisis.
The APP is available through 3rd party Administrators across the country. The application process is relatively straightforward – an APP Administrator can help complete the application and provide guidance on the best advance options available.
– The Advance Payments Program can provide up to $400,000 in cash advances, of which the first $100,000 is interest free.
– The advance amount is calculated as 50% of the expected market price times the number of head on hand.
- The expected market price is set by Agriculture and Agri-Food Canada. Advancing at only 50% of the expected market price buffers the loan against unexpected price drops and ensures that some of the proceeds of sale are kept by the producer.
- For operations with a high and frequent turn over (such as weanling operations) the APP advance can be issued on a continuous flow basis. In this case, the advance is based on the minimum number of head that a producer would have on hand at any given time.
- APP advances must be repaid as the animals are sold and proof of sale is required to be submitted to the Administrator when a repayment is made. In the case of continuous flow advances, the advance must only be repaid 12 months after the date on which it was issued, or the end of the production period, whichever comes first.
- All APP advances must be secured. Livestock advances are secured by animals in inventory. While producers may be concerned that their lending institution may not be willing to sign over the inventory, many financial institutions have informed the federal government that they are willing to work with producers on this on a case by case basis.
- Producers must participate in AgriStability in order to be eligible, however AgriStability payments are only assigned to the APP Administrator in the case of default, to paydown your debt owing on the APP. Any amounts received by the Administrator in excess of your debt owing are returned to you promptly by the Administrator.
– Producers must be owners of the animals.
- Contract feeding operations are not eligible unless there is partial ownership.
- Breeding stock are not eligible
- If you have an outstanding Emergency Advance from 2008, you may still be eligible for a standard APP advance. The advance can be for hogs or for other commodities you produce and the amount of the advance will take into account amounts outstanding from previous production periods. A producer cannot have more than $400,000 outstanding at any one time.
Fork more info and to see a list of the APP administrator serving in a specific area, visit Canadian Pork Council, click here.
