Tools to Manage Farm Risk and Finance

Producers and agribusiness owners face unique challenges, especially when it comes to operating their businesses. It can be difficult to know where to look for assistance programs that focus on risk management and protecting agricultural producers from income and production losses. 

The following initiatives were designed to help Canadian farmers manage risks that could threaten the profitability of their farms. This collection of farm risk and finance resources, from startup loan assistance to financial programs created to help with income instability,  has you covered. 

Farm Risk and Finance Assistance Tip No. 1: Financing Your Farm

Like other small business ventures, farm and agribusiness owners often require the use of outside financing to cover any startup, diversification, and expansion costs. In fact, almost every farmer and agribusiness owner will need third-party funds to pay employees or purchase machinery, seeds, stock, and feed at some point during their careers. 

Fortunately, there are several financing options available, both through government programs and private lenders, including:

Advance Payments Program

The Advance Payments Program is a federal loan guarantee that offers agricultural producers low-cost cash advances. Qualified recipients can receive up to $1 million in advances based on the total value of the eligible agricultural products they will produce or that they have in storage. 

The Canadian government will pay all interest on the first $100,000 of an advance (the first $250,000 for 2022 and 2023), and the recipient will pay back the cash advance as they sell their agricultural products, with up to 18 months (up to 24 months for cattle and bison) to fully repay the advance.

Canadian Agricultural Loans Act Program

The Canadian Agricultural Loans Act Program was developed to offer farmers and agricultural cooperatives more loan options. Farmers can use these loans to establish, improve, and develop their farms, while agricultural cooperatives can utilize these loans to process, distribute, or market farming products.

Farm Credit Canada

Farm Credit Canada offers financing to primary farm producers and agribusiness and agrifood operations, such as suppliers and processors, that serve primary producers. Operations of all sizes and producers of any age are eligible. 

Farm Risk and Finance Assistance Tip No. 2: Protecting Your Farm

Every Canadian farm and agribusiness should have a risk management plan to help minimize loss due to weather, lapses in production, or market fluctuations. Under the Sustainable Canadian Agricultural Partnership (Sustainable CAP), business risk management programs help producers mitigate issues that could threaten the viability of their farms. Federal and provincial/territorial governments share the costs of Sustainable CAP business risk management programs, which include AgriStability, AgriInsurance, AgriInvest, and the AgriRecovery framework. 

AgriStability 

AgriStability protects Canadian producers against dramatic declines in income due to production loss, increased costs, and market conditions. Those wanting to participate in this margin-based program are required to enroll in the program each year, pay a fee, and submit a form by the applicable deadline. FBC can also help members with AgriStability applications.

AgriInsurance

This program focuses on stabilizing farming income by reducing the economic effects of production losses caused by severe but natural events, such as drought; flooding; high winds; excessive rain, heat, or snow; insect infestation; wildlife; disease; and more. Eligible participants in this provincially delivered program will receive payments when they experience a production loss during the year.

AgriInvest 

AgriInvest is a self-managed producer-government savings account created to help you manage minor declines in income by matching investments. Each year, you can deposit up to 100 percent of your allowable net sales into your AgriInvest account and receive a matching government contribution of 1 percent. Your AgriInvest account will grow as you continue to make deposits, receive matching contributions, and earn interest. For an additional fee, FBC supports AgriInvest applications for our members. 

AgriRecovery Framework 

The AgriRecovery Framework works to reduce the extraordinary costs producers must pay to recover from disasters. Extraordinary costs are costs that aren’t incurred under normal circumstances but are used to reduce the major impacts of a disaster and to resume farming operations as quickly as possible. 

Transition Planning 

Transition planning involves a detailed approach that focuses on increasing asset value and protecting your hard-earned possessions from creditors and the Canada Revenue Agency. And while having a proper plan as you take over or exit an agribusiness is important, transition planning also helps you understand how to enjoy your retirement years while still helping your successors. Learn how an FBC consultant can help you with the transition-planning process. 

Farm Risk and Finance Assistance Tip No. 3: Managing Debt 

Unforeseen circumstances can have a dramatic impact on your ability to repay loans on time. The Farm Debt Mediation Service offers free financial counseling and mediation services to farmers who may be struggling to meet certain financial obligations. With the help of a mediator, this government-sponsored program helps producers and creditors work together to find a mutually acceptable solution.

Farm Risk and Finance Assistance Tip No. 4: Prioritizing Your Mental Health

The agriculture industry can be demanding, unpredictable, and extremely stressful, and mental health challenges are common among the men and women who work in the industry. Taking care of your mental health is just as important as taking care of your physical health. 

Here are some resources that can help agribusiness workers find the support they need: 

• Rooted in Resilience
• Mental Health and Farm Business Management
• AgTalk Peer-to-Peer Support Platform
• Canadian Centre for Agricultural Wellbeing

Looking for additional resources? AgPal offers many curated lists of resources helpful to those in the farming and agribusiness sector, including financial services, licensing and regulations, animal care, business support, and commodities information.

FBC: Helping Canadian Farmers with Tax Planning

For more than 70 years, we’ve helped hardworking Canadian farmers and agricultural producers save time and money by connecting them to a people-powered network of tax, bookkeeping, payroll, and financial planning experts.

We deliver industry-specific support for your business that helps maximize your tax savings, simplify your books, and manage your payroll.

Farmers, we can help you stabilize your income and pay fewer taxes over time. Learn how optional and mandatory inventory adjustments can help average out your income fluctuations and ultimately save you money. Download our free guide, Tax Planning for Farmers.

You’re more than just a number to us. We invest in our relationships with FBC Members, making sure you receive every dollar you deserve. Book online now or call us at 1-800-265-1002.

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