OTTAWA – Canadian bankers were on Parliament Hill last week, urging politicians not to expand the mandate of the Farm Credit Corporation.
Representatives of the Canadian Bankers Association met MPs and senators to urge that agriculture minister Ralph Goodale step back from plans to give the crown lender greater scope to lend to rural businesses.
“It seems to us they are moving toward making the FCC a rural bank,” John Murphy, of the Royal Bank in Winnipeg, said in an interview.
He said there are rumors the FCC might even be given the ability to take farmer deposits.
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“They already compete with us to get NISA (Net Income Stabilization Account) deposits,” he said. “We think they are proposing to expand the mandate of FCC without really looking at what services already exist and what is needed.”
At a news conference in Winnipeg, Murphy and other CBA representatives warned that an expanded FCC could drive some banks out of rural communities.
Goodale has promised changes next autumn, possibly to be announced this summer. He wants the FCC to be able to lend to rural agriculture-connected businesses even if they are not farmer-controlled, as current rules require.
During an appearance last week before the Senate agriculture committee, the minister said he wants to end the anomaly that if two brothers in Sedley, Sask., one a farmer and one a store owner, were interested in creating a seed-cleaning plant that could create five local jobs, the farmer brother could get help from the FCC under existing rules and the merchant brother could not.
“It is that kind of silly distinction we can do without,” Goodale told senators.
But the bankers would prefer that FCC finance only beginning and high-risk farmers but stay away from commercially stable operators who are eligible for commercial credit.
“We think there is a role for FCC,” said Murphy. “Many of our good clients started out on a shoe string as FCC clients. But there is a lack of focus on that now.”
He said Goodale should hold public hearings or a national conference on farm credit to figure out what is currently available “before marching off to legislation.”
Last week’s assault on FCC expansion came just days after Ray Protti, until last month the deputy minister of agriculture, joined the CBA as president June 1.
Murphy said Protti is not involved in the FCC campaign now.
“We don’t think it would be appropriate since he is so close to it,” he said. “So not at this stage. But as it goes on, if he can be a facilitator, he may have a role.”
