Glacier FarmMedia COVID-19 & the Farm

Grain backlog results in record cash advances for farmers

CNS Canada — The lack of grain movement in Canada has prompted a record number of farmers to request advance payments so they can get bills paid and start planning for inputs on next year’s crop.

Rick White is the executive director of the Canadian Canola Growers Association, one of the groups the federal government is using to facilitate the Advance Payment Program.

According to Rick White, executive director of the Canadian Canola Growers Association, a total of 12,500 producers have applied for payouts so far — well above the total of 10,000 applications seen the previous year.

The Winnipeg-based CCGA acts as an administrator for the federal government’s Advance Payment Program for farmers, and handles APP advances for over 20 different grain and oilseed crops.

Normally farmers would be selling their grain right now, to cover existing bills from last year’s crop, while paying off short-term loans. “That’s what this program is for,” said White.

However, limitations on grain deliveries due to the unavailability of grain cars have resulted in a rush among farmers to get short-term financing.

Already 650 farmers sit at the $400,000 limit so the CCGA has asked the federal government to increase the advance limits under the APP to accommodate demand.

The size of the average advance being requested by farmers is also on the increase, White said.

“This year we’ve issued $500 million more than we did last year; that’s a lot of money that tells us farmers are getting cash-strapped out there.”

Usually the CCGA sees a downward trend and slowdown in APP paperwork after the New Year but the number of requests has kept its agents “hopping busy” so far in 2014, he said.

On April 1 a new Spring Advance Program is due to be introduced, with 450 producers having already filled in their pre-applications. The advantage of waiting until then, White said, is that it gives the farmer a new 18-month cycle to get the advance paid off.

Given the backlog of grain transportation logistics, and the inability of farmers to clear the backlog themselves, White expects producers to continue and try to find ways of cash-flowing their own operations.

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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