Agricultural Marketing Programs Act

Marginal note:Agreements to guarantee repayment of advances

• 5 (1) Subject to the other provisions of this Act, the Minister may make an agreement with an administrator or with an administrator and a lender for the purposes of

  • (a) guaranteeing to the administrator or, if the agreement is made with an administrator and a lender, to the lender, the repayment of advances that the administrator makes to eligible producers from money borrowed for the purpose of making the advances, together with any interest on the advances; and

  • (b) setting out the obligations of the administrator in relation to the advances and their repayment.

• Marginal note:Lender guarantee

  (1.1) An advance guarantee agreement may be made only with an administrator and a lender if the Minister is satisfied that doing so will reduce the interest payable to the lender and the agreement is made subject to terms and conditions approved by the Minister of Finance.

• Marginal note:Conditions concerning the guarantee

  (1.2) If a guarantee under the advance guarantee agreement is made to a lender, the agreement must provide, in addition to any other terms and conditions, that the interest rate on the money provided by the lender will not exceed the rate specified in the agreement.

• Marginal note:Administrator qualifications

  (2) The administrator must demonstrate to the Minister that

  • (a) it represents eligible producers in an area who produce in that area a significant portion of the crop for which the advances will be made; and

  • (b) the administrator is capable of meeting its obligations under the advance guarantee agreement.

• Marginal note:Terms and conditions

  (3) In addition to designating the crop and specifying any other terms and conditions governing advances and their repayment, the advance guarantee agreement must provide that the administrator agrees

  • (a) to make an agreement with each buyer mentioned in subparagraph 10(2)(a)(i), other than the administrator, to withhold amounts as provided in that subparagraph and to remit them immediately to the administrator;

  • (b) to withhold amounts as provided in subparagraph 10(2)(a)(i) in cases where the administrator is the buyer;

  • (c) to make the advances from money borrowed from a lender;

  • (d) to ensure that the interest rate on the money borrowed by the administrator will not exceed the rate specified in the advance guarantee agreement;

  • (e) to take steps, in accordance with the terms and conditions of the advance guarantee agreement, to ensure that before an advance is made the crop is harvested, of marketable quality and adequately stored by the producer so as to remain of marketable quality until disposed of in accordance with the repayment agreement;

  • (f) to repay the money it borrows from the lender, together with the interest, by paying to the lender, within the period specified in the advance guarantee agreement, the amounts the administrator receives as repayment of advances;

  • (g) if a producer defaults, to pay

    • (i) to the lender, within the period specified in the advance guarantee agreement, the administrator’s percentage, as determined under the regulations, of the amount of the producer’s liability under paragraph 22(a), and

    • (ii) to the Minister within the same period the same percentage of the amount of interest paid by the Minister under subsection 9(1);

  • (h) to pay to the Minister any additional interest resulting from its failure to make payments required by paragraphs (f) and (g); and

  • (i) to pay to the Minister, within the period specified in the advance guarantee agreement, the Minister’s percentage, as determined under the regulations, of an amount repaid to the administrator under a repayment agreement by a defaulting producer if the Minister has previously made a payment for the producer under subsection 23(1).

• Marginal note:Administration fees

  (4) The administrator may charge fees to producers for administrative services, including fees for receiving and dealing with applications for advances and for administering advances. The fees may be charged only for the purpose of recovering administrative costs under this Part and are subject to any terms and conditions of the advance guarantee agreement.

• Marginal note:Maximum contingent liability

  (5) The aggregate contingent liability of Her Majesty in relation to principal outstanding under guarantees made under advance guarantee agreements must not at any time exceed $1.9 billion, or any greater amount that the Governor in Council may prescribe by regulation.