The BSE crisis could create lasting damage in parts of the farm and rural economy in general and the cattle industry in particular.
But one thing may emerge unscathed and perhaps will even be strengthened by it – the business relationship between the cattle industry and its financiers.
Producers and others in the cattle industry say they have been well served by banks and other lenders during the past year.
“I can’t say a single thing bad about the banks,” says Rick Paskal, a feedlot operator from Picture Butte, Alta., and former vice-president of the Alberta Cattle Feeders Association.
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“They have been excellent to work with. They may have had some reservations at the start but for the most part they’ve worked very well with the agriculture industry through this crisis.”
Marilyn Jahnke, a cattle producer from Gouldtown, Sask., and president of the Saskatchewan Stock Growers Association, wasn’t as effusive in her praise, but she agreed lenders have generally been helpful and under-standing through the past tumultuous year.
“The banking institutions said they would stand by their clientele and I think they have,” she said.
From her conversations with producers, it seems that if anybody had a problem and went to their bank to try to work something out, they usually came away satisfied.
“It hasn’t all been rosy, but I think as a whole it’s been pretty positive,” she said, adding she hasn’t heard of any producers being forced out of business solely due to BSE-related financial problems.
Paskal said it is clearly in the banks’ best interests to help their cattle industry customers weather the BSE storm and stay in business.
“There will be a return to some kind of normality eventually,” he said.
“When it happens, the banks still want to be there, they want to keep a good relationship.”
Brian Little, national agriculture manager for RBC Royal Bank, agreed the banks have nothing to gain by putting the squeeze on their cattle industry clients.
“Clearly we all have a vested interest in this. “We all want to come out on the other side.”
The closing of the U.S. border in the wake of the BSE in Alberta last May sent financial shock waves through the cattle industry, putting an immediate cash flow squeeze on cow-calf producers, feedlot operators and a plethora of related industries and rural businesses, including truckers, feed mill operators and farm supply companies.
Lenders got in touch with their affected customers right away to assure them they were prepared to help deal with the crisis.
“We understood our customers were going through an incredibly stressful period,” said Lyndon Carlson, a senior vice-president with Farm Credit Canada. “We wanted them to know we were with them for the long run.”
FCC told its customers they could defer upcoming payments, an offer that remains in place. While that received a positive response, not as many producers have taken advantage of it as might have been expected.
“Really remarkably, probably 90 percent of our clients said, ‘no thanks, I’ll give this a run and try to make my payments as best I can,’ ” Carlson said.
He said 98 to 99 percent of FCC’s cattle industry clients, most of which are cow-calf operators, are up to date on their payments, including those who have opted for deferrals.
Little said he believes the experience of the BSE crisis will help forge a stronger relationship between the bank and its cattle industry clients.
“We’ve received a lot of good positive feedback from our customers about our willingness and desire to work through this with them.”
Little acknowledged that banks have their own shareholders to answer to and the longer the border remains closed, the more difficult it will be to carry on with the current programs.
“But we haven’t yet reached that point and we continue to work through this with our customers.”
Carlson said the key will be for the border to reopen before the fall calf run.
If that happens, then the industry will be able to put the crisis behind it and move forward. If that doesn’t happen, the outlook becomes bleak.
“At that point we’ll have to start looking at each of our customers and their outlook and talk about alternatives, whether they can hang in for another year or maybe look at things like herd adjustments,” he said.
