Regulations Amending the Agricultural Marketing Programs Regulations (2025): SOR/2025-90

Canada Gazette, Part II, Volume 159, Number 7

Registration
SOR/2025-90 March 7, 2025

AGRICULTURAL MARKETING PROGRAMS ACT

P.C. 2025-315 March 7, 2025

Her Excellency the Governor General in Council, on the recommendation of the Minister of Agriculture and Agri-Food with the concurrence of the Minister of Finance, makes the annexed Regulations Amending the Agricultural Marketing Programs Regulations (2025) under paragraph 40(1)(c)^{footnote a} of the Agricultural Marketing Programs Act ^{footnote b}.

Regulations Amending the Agricultural Marketing Programs Regulations (2025)

Amendment

1 Subsection 10(7) of the Agricultural Marketing Programs Regulations ^{footnote 1} is replaced by the following:

(7) For the purposes of subsection 9(1) of the Act, the amount fixed by regulation is $250,000 for program year 2025.

(8) The following definitions apply in this section.

program year 2019 means the program year that ends on March 31, 2021. (année de programme 2019)

program year 2022 means the program year that ends on March 31, 2024. (année de programme 2022)

program year 2023 means the program year that ends on March 31, 2025. (année de programme 2023)

program year 2024 means the program year that ends on March 31, 2026. (année de programme 2024)

program year 2025 means the program year that ends on March 31, 2027. (année de programme 2025)

Coming into Force

2 These Regulations come into force on the day on which they are registered.

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Regulations.)

Executive summary

Issues

Canada’s agricultural producers are facing uncertainly and financial pressures ahead of the 2025 growing season. These are the result of challenges including falling commodity prices and high interest rates, as well as the potential impacts of domestic and global market issues and geopolitical instability.

According to the Farm Product Price Index, commodity prices have fallen by 7.9% on average compared to average prices in 2023. This is largely due to drops in grain (-22.6%) and oilseed (32.7%) prices. On average, according to the Farm Input Price Index, farm input costs have increases slightly (+1.2%) over this period, due to increases in plant and seed costs (+5.4%), pesticides (+0.5%), livestock purchases (+29.0%) and animal production costs (+2.6%). Fuel (-6.2%) and fertilizer (-10.2%) costs have decreased to somewhat offset the cost increases in these other areas. Despite reductions in interest rates, borrowing rates have also remained high when compared to pre-COVID interest rates of between 2 and 3%. In 2023, interest expenses accounted for 9.3% of total operating expenses, the highest in over 20 years.

Producers are also facing geopolitical and market uncertainties on a number of fronts heading into the 2025 production season. On September 9, 2024, China announced an anti-dumping investigation of Canadian canola seed. This investigation is ongoing with the results and impacts on the sector being largely unknown. An executive order has been signed by the U.S. to implement economy-wide tariffs of 25 percent on imports from Canada, which has exacerbated sector uncertainly significantly. While a 30-day hold on the tariffs was announced by the U.S. on February 3, 2025, it is possible these tariffs could be implemented following the hold. There also continues to be potential for unanticipated impacts from current geopolitical issues such as Russia’s invasion of Ukraine and continuing unrest in the Middle East, as well as unanticipated weather-related events through the Spring and Summer growing season (e.g., drought, flooding, wildfires, etc.).

These uncertainties and challenges are contributing to the continuation of the highly volatile market conditions we have seen over the last several years, which bring both upside potential and downside risk to producers and can negatively impact producer margins and the availability of the cash flow they need to cover their operating costs.

Background

The APP is a statutory program under the Agricultural Marketing Programs Act, and its regulations. It is a federal loan guarantee program that provides eligible agricultural producers with access to low and no-interest cash advances to increase their cash flow over their production and marketing periods and increase their marketing opportunities (e.g., sell when it is most opportune and at the best price). Eligible producers can access cash advances of up to 50 percent of the estimated market value of eligible agricultural products being produced or held in storage. The maximum APP advance is $1 million (i.e., $1 million against a crop value of around $2 million), with the federal government typically paying the interest to administrators’ lenders on the first $100,000 advanced to each producer (referred to as the interest-free limit). Most major agricultural commodities are eligible under the program, including grains and oilseeds, fruits and vegetables, and livestock.

The APP is administered by 26 industry organizations (APP administrators) across Canada, which issue advances using credit that they are able to negotiate with their lender(s) (banks, credit unions, etc.). Because of the federal guarantee, APP administrators are able to negotiate lower interest rates, which allows them to offer competitive interest rates to producers on the interest-bearing portion of advances.

APP advances are typically available starting April 1st of each year until March 31st of the following year (when advances for the next program year become available). Producers are required to make repayments within 30 days of a sale of the commodity on which an advance was obtained, with up to 18 months to fully repay advances on most eligible commodities (up to 24 months for cattle and bison advances). For example, the application deadline for 2024 advances closes on March 31, 2025, with a repayment deadline of September 30, 2025 (March 31, 2026, for cattle and bison advances). New advances for the 2025 program year will be available beginning on April 1, 2025, with an advance deadline of March 31, 2026, and a repayment deadline of September 30, 2026 (March 31, 2027, for cattle and bison advances).

On average (based on 2016–2021 data) and under normal program parameters, the APP issued $2.5 billion in advances to over 20 000 producers and paid approximately $17.3 million in interest on behalf of producers. However, interest rates were much lower during these years, so costs were also lower. As APP advances are guaranteed under the Agricultural Marketing Programs Act (the Act), where necessary, Agriculture and Agri-Food Canada (AAFC) will repay defaulted advances to APP lenders, which then become debts to the Crown. This, however, is a rare occurrence under the program (only around 0.96 percent of total advances) and on average, 50 percent of defaulted amounts are recovered.

The APP’s interest-free limit was increased to $250,000 for the 2022 program year, $350,000 for 2023 and $250,000 for 2024. Additional interest savings for the sector are estimated to amount $174.2 million over the three-year period.

• For 2022, 18 940 producers received $3.5 billion in advances. A total of 9 634 producers benefitted from the limit increase, and of these, 5 122 were able to maximize the $250,000 interest-free benefit.
• For 2023, 21 467 producers received $4.5 billion in advances. A total of 7 504 producers received interest-free advances above $250,000, and of these, 4 950 received the maximum interest-free benefit of $350,000.
• For 2024, 21 472 producers have received $4 billion in advances to date. A total of 12 692 producers have received interest-free advances above $100,000, and of these, 6 580 have been able to receive the maximum interest-free benefit of $250,000.

The APP program limits are set in the Act and can be adjusted through an amendment to the Regulations. Without this regulatory amendment, the Regulations require that the interest-free limit return to $100,000 beginning with the 2025 APP program year.

Objective

The objective of this temporary measure is to decrease the cost of borrowing under APP, increasing producer access to the cash flow it provides over the 2025 growing and marketing season. As APP cash advances are advances against producers’ future sales, reducing the interest paid by producers will also ensure they retain more of their revenues, which they can then reinvest back into their farming businesses. The measure is expected to help to relieve some of the uncertainty and financial pressures discussed above so producers can cover their operating costs and continue to grow and market their agricultural products in 2025.

Broadly, this temporary change to the APP will directly impact primary food production, support a stable consistent food supply and help to reduce some of the pressures resulting in food inflation and economic volatility in the sector.

Description

The measure amends section 10 (Fixed Amounts) of the Regulations by

Adding the following as the new subsection 10(7):

• (7) For the purposes of subsection 9(1) of the Act, the amount fixed by regulation is $250,000 for program year 2025; and

Renumbering the current 10(7) to 10(8) and adding the following:

• program year 2025 means the program year that ends on March 31, 2027.

Regulatory development

Consultation

The amendments were not prepublished in the Canada Gazette, Part I, as it constitutes a simple and temporary change to APP, one which has been made several times over the past few years and which the sector has supported.

There has been sustained media coverage concerning the many challenges farmers are facing. These include the impacts of increased interest rates and farm input costs, disruptions to supply chains due to international conflicts, the potential for significant market challenges (e.g., China’s anti-dumping investigation into Canadian canola seed imports and the threat of tariffs on exports to the U.S.) and other challenges.

Through ongoing consultations with APP administrators, which are sector organizations, it was determined that producers would welcome the additional interest savings in 2025–2026. Though not a permanent change, the reaction from industry and media is expected to be neutral to positive.

Modern treaty obligations and Indigenous engagement and consultation

An assessment of Modern Treaty implications was conducted on the proposed amendment. The assessment did not identify any Modern Treaty implications or obligations. It is anticipated that producers in Modern Treaty areas could be recipients of the cash advances and benefit from the increased interest savings, where they meet the program’s eligibility criteria.

An assessment was conducted to ensure that the proposal is consistent with the United Nations Declaration on the Rights of Indigenous Peoples and statutory obligations from section 5 of the United Nations Declaration on the Rights of Indigenous Peoples Act. While the objective of the proposal is to decrease the cost of borrowing under APP, increasing producers’ access to the cash flow it provides, the benefit may not be enjoyed on an equal basis by First Nations, Inuit, and/or Métis Peoples given that Indigenous Peoples can face barriers to accessing the program which were identified in the 2023 Review of the Agricultural Marketing Programs Act.

AAFC has begun consultations with Indigenous organizations with the aim of discussing and addressing barriers to accessing government financing programs, such as the APP. AAFC will also monitor and assess for implications during the delivery of funds.

Instrument choice

Under the Act, an increase to APP limits must be made by obtaining approval of the Governor in Council to amend the Agricultural Marketing Programs Regulations. The Minister of Finance must concur with the program change.

Regulatory analysis

Benefits and costs

The benefit to producers of this program change will be in the form of increased interest savings on advances over $100,000 and up to $250,000. It is expected that the program change will provide approximately 13 299 participants with a combined $66.1 million in additional interest savings for the 2025 program year, with average incremental savings of $4,969 per producer depending on the value of their 2025 advance.

The total estimated cost to the Government of the program change includes the cost of bearing the added interest payments for 2025, as well cost related to defaulted advances paid by the government under the guarantee. It is expected that this program change will result in incremental costs to the Government of $63.2 million, including $54 million in interest costs and $9.2 million in default costs (net of recovered defaults). These estimates are based on a prime rate of 5.2 percent, an increase in participation based on past experience at this limit, and average historical default and recovery rates.

To cover the costs of delivering the program, the not-for-profit APP administrators charge producers interest rates on the interest-bearing portion of advances above the rate they pay their lenders (i.e., an interest spread). As a result, the producer interest savings will be higher than the interest cost to government. They also charge certain fees, such as administrative and default management fees. Fees vary significantly across the program and are determined by the administrator’s business model and the size of its APP clientele. To offset the loss of interest spread revenue resulting from the interest-free limit increases from 2022 to 2025, some APP administrators will increase their fees to cover their costs.

Through this temporary measure, the government will provide a transfer to producers; however, in doing so, it generates corresponding benefits in the form of an increase in the interest-free portion of APP advances in order to provide participating farmers with access to affordable financing at a time when they are facing significant uncertainty and financial pressures heading into the 2025 growing season.

Small business lens

Analysis under the small business lens concluded that this regulatory amendment will impact small businesses as defined under TBS’s Policy on Limiting Regulatory Burden on Business (fewer than 100 employees or less than $5 million in annual gross revenues). The majority of Canadian farms fall under this definition. The amendment is not anticipated to result in additional direct costs to small businesses. It would increase the affordability of the APP and, therefore, increases farming businesses’ access to credit with which to cover their operating costs over the growing season.

One for one rule

The one-for-one rule does not apply. The regulatory amendment will not result in an increase or decrease in administrative burden to farming businesses.

Regulatory cooperation and alignment

The regulatory amendment is not anticipated to result in any regulatory cooperation and/or alignment issues and is not related to a work plan or commitment under a formal regulatory cooperation forum.

International obligations

This regulatory amendment is not impacted by obligations in Canada’s international trade agreements.

Effects on the environment

In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment (SEEA Directive), a preliminary scan concluded that a SEEA is not required.

Gender-based analysis plus

A Gender-based analysis plus (GBA+) assessment was undertaken for this regulatory amendment based on program requirements and sector demographics information from the 2021 Census of Agriculture. Its conclusions were as follows.

Farm operators aged 55 and older represented 60.5% of the farm population in 2021. Women represented 30.4% of farm operators and 26% of operators that farm grains and oilseeds in 2021. Indigenous farm operators represented 2.2% of all farm operators, and 1.2% of all grain and oilseed farm operators in 2021. Given the demographics of the primary agriculture sector and grain and oilseed operations, the APP initiative will mainly support farms where operators are white men over the age of 55 years. Under-represented groups are also targeted to benefit from this initiative, as the program is open to all agricultural producers of eligible commodities who meet the definition of a “producer” set out in the Act. Factors such as gender, age, culture, and education are not considered in determining program eligibility. Given this, there are no specific barriers known to accessing this program. However, a revised data collection plan will be explored to collect voluntary disaggregated data to support assessment of program impacts and potential barriers.

Furthermore, while under-represented and marginalized groups make up a smaller portion of farm operators in the sector, they are more likely to benefit from financial measures such as keeping the interest-free limit as they generally have smaller-scale operations. Small-scale farms tend to operate on smaller margins with lower cash flow and therefore have less capital to invest, less access to crop insurance to recover from catastrophic loss, and reduced financial security to withstand multiple poor production years.

As this regulatory amendment is targeting the farming sector related to primary food production, by supporting agricultural producers, the government will support a robust and competitive food system that benefits the general population. Indirect benefits may be felt in regions where agriculture is a main economic driver as income and profits are likely to have downstream positive impacts in the surrounding community.

Implementation, compliance and enforcement, and service standards

The Regulations come into force upon registration. For the majority of producers, the 2025 APP program year will begin on April 1, 2025, as APP advances are typically available starting April 1st of each year until March 31st of the following year (when advances for the next program year become available).

AAFC will contact APP administrators to discuss this program change and what will be needed to roll it out to producers in time for the start of the 2025 program year. As in past years, federal officials will work with administrators to implement the program change, including drafting/amending 2025 advance guarantee agreements, updating program documents, promoting the extension of the interest-free limit increase, and taking any other steps necessary.

Contact

Justin Sugawara
Director
Financial Guarantee Programs Division
Programs Branch
Agriculture and Agri-Food Canada
Email: justin.sugawara@AGR.GC.CA