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:Restriction

  (1.1) An advance guarantee agreement may be made with an administrator and a lender, or with an administrator that is a lender, only 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, or to an administrator that is 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, or by the administrator, as the case may be, will not exceed the rate specified in the agreement.

• Marginal note:Administrator to demonstrate ability

  (2) An administrator must demonstrate to the Minister that it is capable of meeting its obligations under the advance guarantee agreement.

• Marginal note:Terms and conditions

  (3) In addition to identifying the agricultural products and specifying the terms and conditions governing advances and their repayment, an 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,

    • (i) in the case of an agricultural product that is storable, it is of marketable quality and stored so as to remain of marketable quality until disposed of in accordance with the repayment agreement or, if that agricultural product is in the course of being produced, or is not yet produced, the amount of the advance is covered by a program listed in the schedule and amounts that may be received under that program are assignable, and

    • (ii) in the case of an agricultural product that is not storable, it is of marketable quality and maintained so as to remain of marketable quality until disposed of in accordance with the repayment agreement, the amount of the advance is covered by a program listed in the schedule and amounts that may be received under that program are assignable or, if that agricultural product is in the course of being produced, or is not yet produced, the amount of the advance is covered by a program listed in the schedule and amounts that may be received under that program are assignable;

  • (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:Exception

  (3.1) The terms described in paragraphs (3)(c) and (f) and subparagraph (3)(g)(i) — and in paragraph (3)(h) in relation to payments required by paragraph (3)(f) and subparagraph (3)(g)(i) — are not required if the Minister and an administrator are the only parties to the agreement.

• Marginal note:Schedule

  (3.2) The Governor in Council may, by regulation, on the recommendation of the Minister, amend the schedule by adding to it, or deleting from it, the name of a program.

• Marginal note:Restriction

  (3.3) An amendment to an advance guarantee agreement may not be made during the period specified in it that constitutes the production period if doing so would extend that period beyond 18 months, or the longer period fixed by the Minister, if one was so fixed before the advance guarantee agreement was entered into.

• 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 the principal outstanding under guarantees made under advance guarantee agreements must not at any time exceed $5 billion or the amount fixed by regulation.

• Marginal note:Administrator’s percentage

  (6) The administrator’s percentage mentioned in paragraph (3)(g), as determined under the regulations, must be at least 1% and not more than 15%. If the regulations establish a method of calculating that percentage, the percentage is deemed to be 1% if the calculation results in a lower percentage, and 15% if the calculation results in a higher percentage.