The Alberta government is increasing the provincial loan guarantee for feeder associations to $100 million.
The Feeder Associations of Alberta has requested an increase for several years as demand for cattle went up, said chair Eric Boot.
“Cattle prices were way up and there was demand and in the meantime there just wasn’t enough money to go around,” he said.
“It gives us a lot more flexibility to service those feeder associations with a guarantee.”
Cattle prices may have reached unprecedented levels in the last two years, but it is a different story this fall and demand for loans may go down.
“Prices are going to be down, but in my crystal ball we are probably going to maintain or maybe lose a bit,” Boot said.
“A lot of people are still in the industry for the long haul. One bad year doesn’t necessarily mean guys are jumping out of the industry.”
Forty-six local feeder associations operate as producer-run co-operatives to obtain competitive financing from lending institutions to buy cattle. Government provides an overall loan guarantee, which is being increased to $100 million from $55 million.
Producers who work through a feeder association can borrow up to $1 million. The government estimates association members buy 15 to 25 percent of available calves each year.
The local associations retains ownership of the cattle bought under the program. The livestock are fed, managed and marketed by the individual feeder association member. All surplus funds are paid to the member after a member’s account is paid in full.