Over the course of the COVID-19 pandemic, farmers have faced a number of significant challenges. With most restaurants operating at diminished capacity or closed outright, the demand for many farm products has decreased. This leaves producers with excess inventory, some of which they have been forced to destroy. Meanwhile, farm businesses in the fruit and vegetable sector have incurred new costs as they modify equipment to keep employees separated by at least two metres, the distance now recommended by Health Canada. Furthermore, many processing plants have invested in barriers and additional space on the line to keep employees separated.

Farmers who employ offshore workers have also encountered new financial challenges. When these workers arrive in Canada, they need to quarantine for 14 days. During this time, farm businesses pay them without getting the benefits of their labour. They have also been forced to reconsider where these employees live, as the housing provided in the past puts them in close proximity to other workers. As a result, many farmers are now paying to house employees in hotels, which is another significant new expense. In the months ahead, these problems and others like them will continue or even escalate, resulting in greater damage to farm businesses. Fortunately, there are several steps they can take to minimize the impacts of COVID-19.

1. Make accurate projections

If you run a farm business, you should keep your records and bookkeeping up to date so you know where you stand at all times. If you have an accurate sense of what your yields are going to be, you will be in a better position to book your crop ahead of time and put contracts in place that secure the price for your commodity. If your revenue decreases or your overall financial picture is weaker than expected, you may not need to buy as much seed or fertilizer for next year. Projecting your future cash flow puts you in a better position to prepare for shortfalls by reducing or deferring discretionary costs. Instead of spending now, you may discover it makes more sense to do this six months from now.

2. Update your lending arrangements

If you are in a strong financial position now, but projections suggest this will change in the months ahead, it would be wise to get in touch with your lenders immediately. It is far easier to secure a new line of credit or operating line when your business is thriving. If you get this in place before you experience financial difficulties, you will still be able to access this credit, even if your financial situation gets worse. Getting your lenders involved in the conversation early will also prevent them from being surprised when it comes time to do annual reviews next spring. It’s particularly important to let them know if there’s a need for refinancing or new debt. The sooner bankers and lenders are aware of your needs, the more likely they are to work with you and proactively find solutions.

3. Apply for AgriStability and other farm subsidy programs

Even farmers who have failed to access farm subsidy funding in the past may discover they now qualify. For example, if you’re a producer and you know you’re having a down year, you can apply for an interim AgriStability payment. As long as you have completed six months of your fiscal period, you can submit an application based on that, coupled with projections for the rest of the year. If you’re eligible for a payment, you could get paid half of the expected payment now – rather than waiting until May or June of next year – which would offer immediate help with cashflow. In regard to other farm programs, make sure your premiums are paid, you’re hitting your reporting deadline and you fill out the relevant applications as soon as possible.

4. Access COVID-19 relief programs

If your revenues are down and you expect to run into problems, there are still COVID-19 relief programs you can access. If your farm business has payroll, you might be able to take advantage of the Canada Emergency Wage Subsidy (CEWS). Since some of the eligibility requirements have changed, it’s probably best to talk to your Baker Tilly advisor, see if your business qualifies and get an idea of the benefits currently available. Many farm businesses have also been able to access the Canada Emergency Business Account (CEBA) program, which offered a $40,000 loan interest free until December 2022. When you pay this loan back, 25 per cent of the amount owing is forgiven. However, the expected forgivable amount (up to $10,000) is taxable income in the year the loan was received. Recent changes to the CEBA program have expanded eligibility to allow businesses that were operating using a personal bank account to now apply for the loan. In addition, businesses can now access up to $60,000 (an additional $20,000, of which $10,000 would be forgiven) if the operation continues to be affected by COVID-19.