$7.7 billion in loans in 2012-13 | Loans worth $2.3 billion given to producers younger than 40
Farm Credit Canada has reported its second largest profit in history: $514 million for the year ended March 31.
Only the $565 million recorded the previous year surpassed last year’s results.
The board of directors could decide to send as much as $51 million to the federal government as a 10 percent dividend. The remainder would be retained by the corporation for future loans or to act as equity to provide a capital base to offset future business risks.
The corporation’s strong performance reflects an income and asset boom in much of agriculture.
Read Also
Fall rye hits record high in Manitoba
Winter cereals 2025: More Manitoba fields grew fall rye in 2025 than ever before, but winter wheat slipped and, while spring stand survival was good, drought took its toll
Set-aside for loan defaults was decreased, according to the annual report published July 19, reflecting an increased ability of most farmers to service their debts.
The report said 47,000 loans worth $7.7 billion were made in 2012-13. The average loan was $162,000.
With repayments, the corporation’s loans-outstanding increased almost $2 billion to $25.1 billion.
Included in the total for last year was $2.3 billion in loans to producers younger than 40 and the launch of the $500 million Young Farmer Loan program.
FCC describes the sector as booming and optimistic, which president Greg Stewart said is reflected in the loan numbers.
“We believe in the strength of agriculture and the Canadians whose livelihood is food production,” he said in the annual report.
“We’re proud that more than 100,000 choose to be our customers.”
An FCC email said interest income increases as its loan portfolio ex-pands year after year, which adds to the bottom line.
In an interview at the Halifax meeting of federal-provincial agriculture ministers July 19, federal minister Gerry Ritz said the near-record numbers reflect both a buoyant farm economy and a well-run crown corporation.
“We point to these guys as examples of how to do it,” he said.
However, the FCC numbers also reflect Canada’s record farm debt, which Statistics Canada says increased by $4 billion last year to $72.2 billion.
Debt levels have more than tripled in the past two decades since the annual increase began. Every year has set a new farm debt record since 1994.
Lenders and many economists see the increased borrowing as a sign of optimism in the industry. However, even some bank industry officials have warned recently that with current debt levels, the inevitable interest rate increases in future years from current historic-low levels could cause many producers debt-servicing problems.
David Rinneard, director of agriculture and agribusiness for BMO, joined other senior bank officials in voicing concern during a May appearance before the Senate agriculture committee.
“Without question, debt is escalating and will continue to escalate in the sector,” he said.
“In many respects, it has been predicated on a very low interest-rate environment. I remind people when I can that is was just six years ago that interest rates were twice as high as they are today.”
He said many clients are shocked at the implication.
“If you ask anybody, regardless of the industry they are in, whether they can tolerate an interest rate that is twice as high as they are paying today, the response more often than not is ‘no.’ ”
Recently appointed chief risk officer Michael Hoffort said in the FCC report that the farm lender continues to apply “effective risk management” to ensure the financial strength of the corporation given the historic volatility of the agricultural economy.
