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By Alice McFarlane

Financial Support for Farmers

Prime Minister announces $5 billion for loans and APP repayment terms

Mar 23, 2020 | 12:54 PM

The federal government is immediately providing funds for farmers in the wake of the COVID-19 pandemic.

Farm Credit Canada (FCC) will receive an enhancement to its capital base that will allow for an additional $5 billion in lending capacity.

Making the announcement this morning, Prime Minister Justin Trudeau said the new measures will support farmers and agri-food businesses in Canada facing financial hardship.

“For farmers and people across the agrifood business, I know these are hard times. We’re opening up $5 billion in additional lending capacity. Farmers and producers can apply through FCC for the support they need to keep food growing and get it onto our tables,” Trudeau said.

FCC President and CEO Michael Hoffort said the success of the program will require strong collaboration between banks, credit unions, FCC and other financial institutions.

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“FCC has served as a strong and stable industry presence for more than 60 years, and this current situation is no different,” Hoffort said. “We will be working in partnership with other financial providers to offer the solutions needed by the agriculture and food industry to take on the challenges ahead.”

All eligible farmers who have an outstanding Advance Payments Program (APP) loan due on or before April 30 will receive a Stay of Default which will give them an additional six months to repay the loan.

Applicable farmers who still have interest-free loans outstanding will have the opportunity to apply for an additional $100,000 interest-free portion for 2020-2021, as long as their total APP advances remain under the $1 million cap.

Reaction to the announcement has been mixed.

The Agricultural Producers Association of Saskatchewan (APAS) welcomed the government support through FCC and the Advance Payments Program (APP).

APAS President Todd Lewis said the move will assist farm financial liquidity.

“While much of the Canadian economy has shut down, Saskatchewan farmers are getting ready to put in this year’s crop, and they need to know that credit is available to allow them to seed,” Lewis said. “This announcement is a good first step to help spring seeding move forward.”

Lewis said more must be done in the coming weeks as further measures are needed to ensure farmers have cash flow.

“Our net farm incomes have dropped by over 40 per cent in the last two years, and many farm operations have been impacted by low commodity prices, poor weather, trade and transportation disruptions,” Lewis said. “With COVID-19, we are now facing unprecedented business instability going into the 2020 production year and our Business Risk Management programs (BRM) do not provide us with an adequate financial backstop needed to manage these risks.”

Saskatchewan Association of Rural Municipalities President Ray Orb said more access to credit and postponing the APP repayments is good but it doesn’t go far enough.

“I’m hoping that there will be further announcements that are positive in the upcoming federal budget that will address the carbon tax on grain drying and BRM,” Orb said. “I don’t look at more loans as really helping them on their farm, but I realize there are some that need help that way. There are some that will appreciate the APP repayment being extended.”

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alice.mcfarlane@jpbg.ca

On Twitter: @AliceMcF