Alberta farmers now have another service provider when it comes to choosing a cash advance.
Producers in the province can now choose from 11 organizations – five offering cash advances for grains and oilseeds – when they apply for a low-interest or no-interest loan pledged against their crops, livestock or crops. other agricultural products.
But the Entrance to the Alberta Wheat Board in the administration of cash advances is challenged by its main competitor.
The Alberta Wheat Board of Directors first considered becoming a director of the Advance Payments program almost three years ago at a strategic planning meeting. He seized the opportunity for two reasons, according to general manager Tom Steve.
“Partly because we wanted to satisfy our own curiosity and partly because the government encouraged us to consider becoming a director,” he said. “They think there was an advantage in having more administrators who can communicate the benefits of the program and provide an alternative to producers as to how they access it.”
The Alberta Wheat program is available to all producers in the province, not just those looking for a specific product – a problem that has crept into the past with honey, potatoes and greenhouse vegetables. .
“The reality is that some of the other directors offered it primarily to their members,” Steve said.
But Alberta Wheat’s loan program is largely identical to that of the Canadian Canola Growers Association, a major loan provider in the province.
The CEO of the Canola Growers Association called the news “a little surprising, a little disappointing, that AAFC (Agriculture and Agri-Food Canada) has decided to go in the opposite direction by adding a new director for no apparent reason. . “
Federal officials told his organization last year they weren’t looking for more directors – in fact, they talked about downsizing, White said.
“AAFC said their vision for the future was that there would be fewer program administrators, not more,” White said. “There are already 45 to 50 across Canada. We understood that they were hoping for consolidation in the future, not the addition of directors. “
The cash advance program offers loans of $ 400,000, with the first $ 100,000 interest-free and the remaining amount at a competitive rate.
“It’s the same cash advance, it’s nothing new,” White said. “In our opinion, it’s the same program; we’ve been doing this for 35 years. The CCGA has the experience, the business process in place, the built-in efficiencies and various ways of applying and repaying its advances.
“I don’t think there is anything new that anyone can offer farmers. To us this seems to be more of a duplication than anything else, which is unfortunate because the farmers pay for the service.
But Alberta Wheat president Kevin Bender said his organization aims to be different. He called other early programs onerous, and running around to collect signatures was a deterrent for some farmers.
“We’re hoping it will all be done online much more simply – I think it might attract more people to the program,” Bender said. “We’re just trying to provide another medium for our producers. “
The Sylvan Lake producer did not use the cash advance program, but is now considering doing so.
The Wheat Board, which shares the same staff as the Alberta Barley and also manages the finances of the Barley Council of Canada, will charge an administrative fee of $ 50, the same as the Canadian Canola Growers Association. Both groups offer the prime rate on the $ 300,000 portion of the loan.
Although still in his early stages, Steve said there are 25-30 farmers in the Alberta Wheat online application queue, giving him optimism that this initiative has a chance in an already crowded market.
“Considering that we are in the middle of the harvest, we think this is encouraging,” he said. “We just started the Labor Day weekend; we get a lot of phone calls and inquiries. We are very happy at the moment.
The advance of spring always generates more interest, which will provide a more accurate picture of the overall absorption, he added.
It’s unclear whether offering cash advances will generate a surplus, Steve said, but if so, his organization will consult with the agriculture industry to determine how they will be used. The goal will be to reinvest any surplus in Alberta agriculture for the benefit of all producers, he said.
The federal government bears interest charges on the first $ 100,000 of advances issued, as well as losses incurred due to defaults. These costs average around $ 23 million per year, but they fluctuate with changes in interest rates and the economic environment for farming. The federal government does not provide financial support to administrators of the Advance Payments Program.