A new initiative from Farm Credit Canada could help 1,000 Canadians start or expand their farm operations.
President Greg Stewart revealed details of FCC’s new $500 million Young Farmer Loan program at a news conference last week on a farm near Saskatoon.
Under the program, FCC will offer loans of up to $500,000 for purchase or improvement of farmland and buildings.
“This is just another program that we’re trying to launch to help support young farmers even more, given that land prices are going up,” said Stewart. “It’s a capital intensive business.”
Thirty-five-year old Lee Norheim operates a mixed grain and cattle operation outside of Saskatoon under a partnership with his mother.
Ten months ago, he left his off-farm job and starting farming full-time.
“I’m extremely excited about agriculture right now,” he said.
“We’ve really never seen a time like this where both the grain commodities are high as well as the beef commodity is high…. If we have a few more good years, a young producer could really set themselves up for a good lifetime of farming.”
The loans will target producers younger than 40 and come at closed variable rates of prime plus 0.5 percent and special fixed rates, with no loan processing fees, which Stewart said could total $2,500 on a $500,000 loan.
“The average age of farmers across Canada is approaching retirement age,” said agriculture minister Gerry Ritz, who was on hand for the announcement.
“We’re looking to bring the next generation in, so any type of programming that we can bring in that facilitates that certainly will help.”
With FCC lending $1.6 billion to young producers in 2011, Stewart expects the program to reach its cap within the calendar year, with interest coming from young farmers conducting an intergenerational transfer for the first time or producers looking to grow their business.
“This may be the opportunity for those who were on the fence,” he said. “It’ll be a mix of everybody.”
Almost one-third of FCC’s loans were given to young Canadian producers in 2011, said Stewart.
“Most of the young farmers I talk with are basically in a continual expansion mode,” said Norheim, “both because they’re aggressive young individuals, but also because it’s required to be competitive in the business.”