Marginal note:Application of Act

3. This Act applies in respect of crops grown in Canada.

Marginal note:Minister may guarantee repayment of advances

• 4. (1) Where a producer organization proposes to make an advance to a producer out of money borrowed from a lender for that purpose, the Minister may, on behalf of Her Majesty, on such terms and conditions as are fixed by the Minister and subject to this Act, guarantee to the producer organization the repayment of that advance, and the interest on that money that is attributable to that advance.

• Marginal note:Maximum contingent liability

  (2) Her Majesty’s aggregate contingent liability under subsection 12(1), in relation to principal, may not at any time exceed $400,000,000 or such greater amount as Parliament may appropriate for that purpose by an appropriation Act.

• Marginal note:No advance until previous advance discharged

  (3) Where a producer has received an advance guaranteed under this Act or an advance payment under the Prairie Grain Advance Payments Act and is in default in respect thereof, the Minister may not, until the undertaking of that producer in respect thereof has been fully discharged, guarantee to the producer organization the repayment of any new advance or interest on money borrowed that is attributable to any new advance made to that producer.

Marginal note:Conditions for effectiveness of guarantee

• 5. (1) In order for a guarantee from the Minister under this Act to be effective, a producer organization

  • (a) must ensure that the producers to whom it proposes to make advances have produced a significant portion of the crop in question in the area represented by that producer organization, and that the making of those advances will facilitate the orderly marketing of that crop in that area;

  • (a.1) must ensure that where the producer is an individual, the individual has attained the age of majority in the province where the producer’s farming operation is carried on and is principally occupied in that operation;

  • (a.2) must ensure that where the producer is a corporation with only one shareholder, the shareholder has attained the age of majority in the province where the producer’s farming operation is carried on, is principally occupied in that operation and undertakes to be personally liable to the producer organization for any liability of the producer under section 8;

  • (a.3) must ensure that where the producer is a corporation with two or more shareholders, a cooperative or a partnership

    • (i) at least one of the shareholders, members or partners, as the case may be, has attained the age of majority in the province where the producer’s farming operation is carried on and is principally occupied in that operation, and

    • (ii) each of the shareholders, members or partners, as the case may be, undertakes to be jointly and severally liable to the producer organization for any liability of the producer under section 8;

  • (b) must sign a written agreement with the producer under which the producer agrees to repay the advance

    • (i) by selling that portion of the crop in respect of which the advance is to be made to a buyer or buyers named by the producer organization, and authorizing each buyer to withhold from the amount paid to the producer by that buyer, in respect of each unit of crop, an amount determined in accordance with a repayment schedule approved by the Minister that provides for the repayment on a per unit basis of all the advances made to the producer and the interest guaranteed on those advances,

    • (ii) by selling or otherwise disposing of that portion of the crop in respect of which the advance is to be made and paying directly to the producer organization, for each unit of crop, in accordance with the conditions established by the Minister, an amount determined in accordance with a repayment schedule approved by the Minister that provides for the repayment on a per unit basis of all the advances made to the producer and the interest guaranteed on those advances, or

    • (iii) by a combination of the methods described in subparagraphs (i) and (ii);

    • (iv) [Repealed, 1989, c. 26, s. 4]

  • (c) must ensure, if applicable, that the producer gives a written authorization to the buyer to withhold amounts as provided in subparagraph (b)(i);

  • (d) must ensure, except where it itself is the buyer, that the buyer signs an agreement with the producer organization regarding the withholding of amounts as provided in subparagraph (b)(i);

  • (e) must ensure that the interest rate on the money borrowed from the lender by the producer organization does not exceed a rate approved from time to time by the Minister;

  • (f) must have the capacity to sue and be sued in its own name;

  • (g) must ensure that the portion of the crop in respect of which the producer organization proposes to make the advance is of good quality and is adequately stored by the producer so as to remain of good quality until disposed of in accordance with the agreement described in paragraph (b);

  • (h) must ensure that the producer to whom the advance is to be made

    • (i) is not in arrears or in default under another advance in respect of which a guarantee is given under this Act, and

    • (ii) has not given as security ranking in priority to the lien created by section 6 the portion of the crop in respect of which the advance is to be made; and

  • (i) must sign a written agreement with the Minister under which the producer organization agrees

    • (i) that it will repay the money borrowed by it from the lender out of which advances are made by it, together with any interest thereon, on the next working day following the day on which the producer organization receives repayment, in whole or in part, of those advances,

    • (ii) that it will, in the event that a producer defaults and subject to section 9, repay to the lender, in the five working days following the day on which the producer organization learns of the default, an amount equal to 2% of the producer’s liability under paragraphs 8(a) and (b),

    • (iii) that it will pay to the Minister any additional interest resulting from its failure to do any of the things mentioned in subparagraphs (i) and (ii), and

    • (iv) that, where the Minister makes a payment under subsection 12(1) or (2) and subsequently the producer in respect of whose default the payment was made makes a payment to the producer organization in respect of all or part of the producer’s liability to the producer organization under section 8, the producer organization will, within the following five working days, pay over to the Minister that portion of the amount so received by it from the producer that corresponds to the Minister’s payment under subsection 12(1) or (2), as the case may be.

    • (v) [Repealed, 1993, c. 34, s. 60]

• Marginal note:Where crop is damaged

  (2) Where a crop in respect of which an advance has been made is damaged, in whole or in part, the producer thereupon becomes liable to pay forthwith, directly to the producer organization that made the advance to the producer, that portion of the advance and of the interest guaranteed on the advance that is attributable to the damaged portion of the crop.