FEBRUARY 25, 2000
SPRING CASH ADVANCES NOT A SOLUTION: NFU
SASKATOON, Sask.--"Spring cash advances to enable seeding look like a good idea on the surface," says Shannon Storey of the National Farmers Union. "However, a cash advance is merely another kind of loan. Most farmers are already carrying too much debt. What's the point in taking out yet another loan to plant a crop that probably won't pay for itself?"
The NFU Women's President was speaking in response to yesterday's federal-provincial announcement of improvements in aid to cash-strapped prairie farmers. Among the provisions agreed to by the federal, Manitoba and Saskatchewan governments is a clause broadening access to interest-free cash advances.
Cash advances are repaid through deductions from producers' grain sales. Farmers repay a percentage of cash advances every time they sell grain. Elevation charges and rail freight costs are also deducted from grain sales, along with the costs of any inputs purchased from the grain company by the farmer. The farmer is able to use what is left to pay the cost of any other inputs, such as fuel--if there's anything left.
"Farmers need long term solutions to the high cost of inputs and the low prices paid for grains and oilseeds, not new debt. Cash advances are a better approach than loans from companies that often charge prohibitive interest rates. However, advances are not a long-term solution because they do nothing to solve our deeper problems of high input costs and low commodity prices. They will help some people get the crop planted this spring, but many of those people will still be left with an income shortfall next winter," said Storey.
"Even though international grain stocks are currently low, prices for many key farm products remain below the cost of production. Meanwhile, many input costs are expected to rise in the coming year. Companies dealing in gasoline and diesel have already raised their prices. There are structural problems in agriculture that another loan or another advance just won't fix. The government needs to look at those structural problems," concluded Storey.
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For more information, please contact:
Shannon Storey, Women's President (306) 652-9465 or (306) 477-8803
Darrin Qualman, Executive Secretary (306) 652-9465
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