Important Details

1. Applications can only be made at the same time as
   your loan is advanced.

2. A new application and fee will be required every time you request the interest free provision.

3. At the end of the 24 month production period (March 31st), the interest on any eligible loan(s) not paid off by that time will become the responsibility of the member as of April 1st.

4. Maximum interest that will be rebated by AAFC is  prime rate less ¼%.

5. Related producers - Producers are considered related if they do not deal with each other at arm’s length. Without proof to the contrary, producers are presumed
   to be related, if they are blood relatives (child or sibling), married or cohabiting. A shareholder and a corporation are also defined as being related. The definition of “related producers” as per the Agricultural Marketing Programs Act is available from your Co-operative’s administrator.

6. Interest is credited directly to the interest free portion of your Feeder Co-operative loan on a monthly basis.

Important Details

Complete an application form and submit with cheque payable to your Co-operative for $125.00 plus HST where applicable. This fee will cover the administration costs incurred by your Co-operative and BFO to administer this program.

• Eligible interest free portion of the loan advanced
  is based on 50% of the expected market value as
  determined by AAFC. Only a portion of your loan
  may be eligible for the interest free provision.
   

• Interest free period begins when loan is advanced
  and will cease at the end of the production period,
  i.e. March 31, 2020 or whenever the loan is paid
  within the 12 month policy, whichever comes
  first.

Feeder Co-operative Interest Fee Provision

Current Feeder Co-operative rules and policies will continue to exist. Loans will be approved and advanced according to current guidelines. To be eligible for the interest free provision, members will have to complete an APP application form and meet the APP criteria.

INTEREST FREE PROVISION
Up to $100,000. A producer and any related producers not operating at arm’s length are entitled to receive the $100,000 interest free entitlement under the APP once during the production period for all eligible products (livestock and crops). Since June 2019 it was increased to $400,000 if crop was Canola.

ELIGIBLE PRODUCT
Feeder cattle.

ELIGIBLE PRODUCER
Feeder Co-operative member.

PRODUCTION PERIOD

• Production period is 24 months starting April 1st of each year,  ie. April 1, 2019 to March 31, 2020.
   
• Applications must be received within 12 months after the start of each production year.
   
• Feeder Co-operative loan(s) MUST still be paid out within 12 months.
   
• Each production period will overlap 12 months, therefore a producer may have two $100,000 interest free provisions during this period.

ADVANCE RATE
50% of the expected market value, as determined by Agriculture and Agri-Food Canada.

SECURITY
As per present Feeder Co-operative program.

REPAYMENT

• Repayments will be made at at least the repayment rate per head established at time of APP application on the respective Feeder Co-operative Loan.
   
• Repayment must be made as sales occur on a per head basis
   
• The portion of the loan that is interest free must be repaid before any excess equity in the cattle can be given to the member.

Examples of How it Works

EXAMPLE 1
Buy 60 head at $1100/hd, loan is $66,000. If advance rate is $80.00/cwt, and expected market weight is 1100 lbs, the portion of loan eligible for the interest free provision would be $48,000 (or $880 per head) (60 head X 11cwt X $80).

Repayment of above. Member sells a group of 30 head, therefore of the sales proceeds, $26,400 (30 head X $880 per head) would be applied to the Interest Free Provision, and remainder of proceeds would be applied against the regular interest bearing loan.