Financial trouble requires quick action: FCC

Possible options for farmers include postponing payments or making capital injections to reduce the financial pressure

Farm Credit Canada is encouraging its grain-producing customers experiencing financial difficulties to get in touch sooner rather than later.

“People should not be shy in contacting their FCC office and setting up a time to even just have a quick conversation with their relationship manager about what options they do have and what’s needed to move them ahead. The earlier the better,” said Don Anderson, who is in charge of western operations for FCC.

Excessive moisture has delayed harvest and reduced the quality of this year’s crop in Alberta and northern and central Saskatchewan, which will impact many growers’ cash flow and profits for the year.

After weeks of snow and rain, farmers are working day and night to take advantage of the recent break in the weather to salvage crops remaining in the field.

However, racing to get a poorer quality product in the bin is pricier with added expenses for drying, as well as hiring additional help and equipment.

“That comes at a cost and that cost is going to come in higher. Also the impact of this moisture is the large possibility that grades are going to be lower. So it’s going to be having reduced revenue for these producers from a grading perspective as crops are sitting out there. We’re not going to be sitting here with one and two (grade) products anymore but with three or feed,” he said.

“The ability to market that may become more challenging and so trying to ensure that the working capital remains strong for these operations is what we’re trying to achieve here in doing this.”

Anderson said many producers are scheduled to make their semi-annual payments Nov. 1 in conjunction with when they planned to have their crops harvested.

“You match your payments with your paydays but those paydays aren’t coming in. So that’s where we’re saying ‘let’s jump on these ones,’ because a lot of times producers are going, ‘OK, we’ll look at our January, February or maybe March sort of structures,’ and they’ve already depleted some of their cash position if they had payments that were coming out earlier in November or December,” he said.

“That’s why we’re working with them. Trying to be there and also it’s the support, knowing that it’s stress.”

Possible options include postponing payments, whether that is principle deferrals, principle and interest deferrals, or capital injections to reduce the financial pressure on producers impacted by wet conditions.

“We’re really encouraging our producer groups to come and talk to us because there’ll be options that they don’t know which may be helpful for them,” he said.

Lynn Jacobson, president of the Alberta Federation of Agriculture, said the farming community appreciates FCC’s support.

“They’ve recognized the lateness of the harvest and peoples’ bills came due in September or first part of October and there was no grain to sell,” he said.

He said it will help reduce stress, particularly for younger farmers who feel the financial pressure from downgrading and timing of sales.

“It would be a relief to a lot of producers that had outstanding loans; especially a lot of the younger producers will have more loans than the older well-established people,” he said.

Todd Lewis, president of the Agricultural Producers Association of Saskatchewan, thinks FCC’s willingness to work with producers on an individual basis is a good short- and long-term strategic plan.

“These input loans, all these things come due and a lot of us run through FCC and they’ve been good partners to farmers. I think what they’ve done here is carried on that relationship with the producers and I think it’s a pretty important one. A good banker is a big part of agriculture right now and FCC is really stepping up to the plate here,” he said.

“I think there’s some opportunity that people can talk to their lender at FCC and get through and get a crop in next spring.”

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