Written by Madeleine Berg and Syeda Khurram
Spring is a time of renewal and optimism on the farm, but there are also many unknowns that lie ahead for 2021. No matter how much effort, skill and commitment you invest into the growing season, all kinds of uncontrollables - weather woes, input costs, market instability, equipment breakdown and more – may steal your revenue and destabilize your farm business.
But here’s something many farmers, especially those newer to farming, don’t realize: if your farm business falters or fails, it won’t be because of any of those factors. They are inconvenient, unwelcome, and damaging, yes. However, bumps in the road are also inevitable in farming. As such, the real cause for a farm business failure is not having adequate risk management tools in place to meet in-season risks head-on.
Recognizing the unique challenges of farming, the federal government created the Advance Payments Program, a low-cost business risk management tool available exclusively to farmers. The program offers access to increased working capital when and how farmers need it, allowing them to capture opportunities and to weather unexpected financial storms.
The Alberta Wheat Commission is one of approximately 30 administrators of the Advance Payments Program. Called FarmCash, the Alberta Wheat Commission’s cash advance program offers up to $1 million, with the first $100,000 interest-free and the remaining at TD prime minus 0.75 per cent, on over 50 agricultural commodities. FarmCash makes applying simple and convenient with an online application and quick processing that provides access to funds in as little as three to five days.
FarmCash has no restrictions, no administrative fees and just recently expanded beyond Alberta to offer producers in B.C., Saskatchewan and Manitoba the same great program benefits. How farmers choose to use the money is entirely up to them: some maximize its benefits by using every available dollar to increase their working capital; others prefer it as a form of protection against income and production losses, helping them manage risk when the unexpected arises.
Currently, about 57 per cent of Saskatchewan, 27 per cent of Manitoban, and 25 per cent of Albertan farmers take advantage of the Advance Payments Program, but that number is growing rapidly as farmers learn about the program’s advantages. We’re particularly excited that young and new farmers – those whose businesses are often burdened by lower working capital and higher debt – are increasingly turning to FarmCash to improve their financial margins and increase their ability to withstand risk.
Although I wish I could, I can’t guarantee that 2021 is going to be kind to farmers. While FarmCash can’t take away all of farming’s risk, it can help share the burden. FarmCash spring advance applications open March 15, allowing farmers to receive funds as early as April 1, 2021.
The Advance Payments Program is a federal loan program administered by the Alberta Wheat Commission. It offers Canadian farmers marketing flexibility through interest-free and low interest cash advances.
Originally published on March 8, 2021 in the Alberta Seed Guide.