APP interest-free limit set to $250,000

Summary#

This final regulation (SOR/2024-53) temporarily sets the interest-free portion of the Advance Payments Program (APP) at $250,000 for the 2024 program year. It came into force on registration (March 25, 2024) and keeps the overall loan cap at $1 million.

What it does#

• Temporarily fixes the APP interest-free limit at $250,000 for program year 2024.
• Keeps the overall APP loan limit at $1 million.
• Defines “program year 2024” as the year ending March 31, 2026.
• Comes into force on the date of registration (March 25, 2024).

Who's affected#

• Primary agricultural producers who use the Advance Payments Program (APP). The government expects about 11,950 producers to get the increased interest-free benefit in 2024.
• The 27 APP administrators and the banks or credit unions that lend under the program. Administrators set fees and interest spreads; some have raised fees in past years.
• The federal government and taxpayers: the amendment is estimated to cost $63.7 million overall, including about $56 million in interest costs.
• Small farms in particular, since most Canadian farms fall under the small-business definition used in the analysis.
• Demographic note: the APP mainly supports grain, oilseed and pulse producers, a sector where operators have historically been majority male and older; underrepresented groups who use the APP would also benefit in proportion to their participation.

Why it matters#

• It reduces borrowing costs for farmers during the 2024 growing season, helping with upfront expenses like seed, fertilizer and fuel. The government estimates average incremental savings of about $4,916 per producer who benefits.
• Lower short-term financing costs can ease cash-flow pressure on farms, which can help keep production stable and moderate food-price pressures for consumers.
• The change is smaller than last year’s temporary increase (which was $350,000 in 2023), so some producers will see less interest-free support than in 2023.
• The measure has a fiscal cost to the government, and some APP administrators may raise fees to offset lost interest spread revenue.