SASKATOON – Farm Credit Corp. loaned more money to more farmers and earned more profits last year.
“Growth was the operative word for FCC’s performance over the past year,” the Regina-based federal agency said in its annual report for the fiscal year that ended March 31.
New lending rules and low interest rates helped contribute to an 87 percent increase in the number of loans in 1993-94, while net income was 39 percent higher.
The report said FCC approved 5,117 loans with a net value of $511.7 million. That’s the largest volume of lending in a decade and dwarfs the previous year’s totals of 2,734 loans worth $277.1 million. About 39 percent of the total went to refinance existing debt, with land purchases accounting for another 30 percent.
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Net income was up by $7.9 million to $28.3 million. That represents a return on average assets of 0.77 percent, versus 0.56 percent in 1992-93.
A number of factors contributed to the improved financial picture, according to the annual report tabled in the House of Commons June 21.
Expanded program
It was the agency’s first year operating under revised federal legislation that allowed it to expand its financing programs to include diversification and value-added ventures, large-scale farms and part-time farmers. The result was more than $50 million in loans for such things as seed cleaning plants, nursery operations, rural municipal water projects, fish farming and on-farm processing.
“While traditional agricultural lending is still our mainstay, we are seeing great interest in our new (lending programs),” FCC chair James Hewitt said in a press release.
The increased lending also reflected pent-up demand for upgrading farm equipment and facilities, and the fact that with interest rates at a 30-year low, many farmers arranged term financing. In addition, favorable commodity prices and external factors such as settlement of the GATT resulted in “a more positive outlook in the farming community,” said the report.
Denis Chagnon, FCC’s assistant vice-president for communications, said the corporation is hoping for a similar performance in 1994-95, although it’s too early to make any firm projections.
“Interest rates have edged up a bit and that might have an impact,” he said. “But with the new mandate, that’s opened up very exciting possibilities and we’re hoping that gets the market going just a bit more.”
FCC highlights
Other highlights of the agency’s year:
- As of March 31, FCC’s total debt was 10.9 times greater than equity, an improvement from a year earlier when debt was 11.6 times greater than equity. Five years ago, debt was more than 52 times equity.
- The average size of loans was $100,013, slightly below the previous four-year average of $103,500.
- Only five percent of FCC loan accounts were in arrears (a total of $37 million), down from nearly 15 percent four years ago.
- At year end, the corporation owned 1.2 million acres of farmland, 90 percent of it in Saskatchewan. The value of the 2,758 farm properties was pegged at $221.5 million, down slightly from the previous year. During the year, FCC acquired $42.7 million in new land holdings and made sales worth $51.5 million.
- Loans receivable totalled $3.3 billion, down from $3.8 billion four years earlier.
nAdministration costs increased by $5 million to $59 million.
