Gerry Penney figures his proudest accomplishment through nine years at Farm Credit Corporation was helping convert the farm lender from a bottomless deficit pit into “a business with a heart.”
Another way of saying it is that since 1987, Farm Credit has changed from being as close to bankrupt as a crown corporation can get to being a government profit centre.
“I think being able to run the organization as a business with a heart, as opposed to being run as a government department, was the biggest change we brought about,” Penney said in a December interview days after being dropped by the government as FCC president and chief executive officer.
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The government has not explained its decision not to renew Penney’s contract, other than saying change was needed. He was praised for helping clean up FCC books.
Penney would not speculate on why he lost the job he was enjoying and hoped to keep.
“I think the minister and cabinet simply decided for developments down the road, they wanted a change,” Penney said from his Regina home. “I can’t challenge that. I’ve had a good run at it.”
Penney’s run at the FCC began in December 1987, when the Conservative government decided to clean house at the top, firing the executive installed by the previous Liberal government and bringing in its own choices.
Experience in department
Penney came from the Treasury Board as vice-chair. Former British Columbia Social Credit agriculture minister Jim Hewitt was appointed chair.
The 28-year-old corporation was in dire straits after years of heavy losses and a customer base of thousands of farmers unable to pay their debt and careening toward bankruptcy.
In 1987-88, the crown corporation lost $511.8 million and had an accumulated debt of $855 million.
“It is clear that the corporation cannot sustain losses of this magnitude and remain viable,” Hewitt said in his first annual report.
The new managers began to inject tougher standards on new loan eligibility and to show less mercy with those who could not pay.
Gradually, losses declined, unrecoverable loans were written off, hundreds of thousands of acres of collateral land were seized and more than $1 billion in non-performing debt was sharply reduced.
Within seven years, with some restructuring help from the government, FCC was operating in the black and returning a small annual dividend to the federal treasury.
And while some farm groups complained that FCC had become too bank-like, Penney said it actually did struggling farmers a favor.
In many cases, it was better to force the issue into debt review or foreclosure than to leave them dangling on the brink of financial failure.
“We were able to establish a balance that was good for the farmer and for the farm industry,” he said.
Jack Wilkinson, president of the Canadian Federation of Agriculture, concedes the point.
There were tensions between the FCC managers and the farm lobby as the corporation began to practice its form of tough love with struggling farmers, said the CFA leader.
“But at the time, Mr. Penney may have been the kind of person we needed,” he said after hearing that the FCC president was being dropped. “I think a lot of stuff was done that needed to be done and he certainly led that.”
The last farm lobby battle against Penney came last year when the FCC president was advocating a broadening of the mandate to allow loans to rural businesses, even if they are not farmer-controlled.
The CFA argued this could dilute Farm Credit’s vision of helping farmers. The idea has been all-but-dropped by the corporation and the government.
