Farm Credit Corporation president John Ryan came to Parliament Hill last week to proclaim the health of both his crown agency and the general farm economy.
But he also brought evidence that the income crisis hitting many grains and oilseeds producers is having an effect.
The number of FCC clients in arrears increased by 500 last year to 3,200, and 80 percent of the new cases were in Saskatchewan and Manitoba, he told MPs on the House of Commons agriculture committee.
The arrears cases tend to be farmers with serious and long-term financial problems, according to the FCC president.
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However, he said problem cases remain a small percentage of the 44,000 FCC customers.
As well, the six-year, 77 percent growth in the corporation’s portfolio is evidence that many farmers are investing in agriculture to expand or diversify.
“Despite the regular flow of bad news, and I do not deny for a moment there is a problem in some sectors, the message I wanted to bring was that overall, agriculture is a good news story and growing,” he said in a later interview.
During the meeting with MPs, Ryan’s optimism was challenged.
Reform MP Howard Hilstrom raised the issue of growing arrears files. Was that not an indication of the severity of the farm crisis?
“I did not intend to indicate for a moment that there isn’t a problem,” said the FCC president. “Our arrears are indicating that there is a problem.”
He said it is concentrated in the prairie grain sector and many of the problem files have had problems for several years.
Committee chair John Harvard wondered if government and farmers should be nervous that the debt load has increased 50 percent during the past 10 years to $33 billion.
Ryan said much of the increased debt has been for expansion. It is manageable and servicing the debt is not the problem it once was because farmer equity is much stronger today.
He told MPs he expects the corporation’s business to continue to grow, in part because of Canada’s official goal of increasing the country’s share of world food trade to four percent within the next five years.
“Reaching the growth target of $40 billion in agrifood exports by 2005 will require significant capital investment,” he said.
