The federal government announced a pair of financial measures last week aimed at providing temporary financial relief to Canadian farmers who are facing economic hardships stemming from the global COVID-19 pandemic.
On March 23, Ottawa announced that Farm Credit Canada (FCC) will receive an extra $5 billion in lending capacity.
The additional credit will be made available to farmers and food processors on a case-by-case basis and will be used either to defer principal and interest payments on existing FCC loans, or to extend additional lines of credit.
In addition, eligible farmers who have outstanding Advance Payments Program (APP) loan payments due on or before April 30, 2020 will receive a stay of default, Ottawa announced.
APP payments that are due before the end of April will be deferred for an additional six months.
The announcements are part of Ottawa’s plan to support the Canadian economy during the COVID-19 pandemic.
Federal agriculture minister Marie-Claude Bibeau said March 23 that the measures are intended to provide farmers and food producers across the country with “important financial flexibility they will need during these challenging times.
“This injection of credit (to Farm Credit Canada) will permit FCC to help farm and food business owners on a case-by-case basis, with potential deferrals … or to access an additional credit line…,” Bibeau said during a news conference in Ottawa.
Todd Lewis, president of the Agricultural Producers Association of Saskatchewan (APAS), called Ottawa’s announcements “a good first step to help spring seeding move forward.”
But he also suggested that more must be done to ensure the ongoing viability of Canada’s farm economy.
“Our net farm incomes have dropped by over 40 percent in the last two years, and many farm operations have been impacted by low commodity prices, poor weather, and trade and transportation disruptions,” Lewis said.
He urged Ottawa to improve farm business risk management programs and ensure that agricultural producers are better equipped to deal with unforeseen challenges that can impact farm revenues.
“With COVID-19, we are now facing unprecedented business instability going into the 2020 production year and our business risk management programs do not provide us with an adequate financial backstop needed to manage these risks,” Lewis said.
“We need further measures to ensure that we have the cash flow and financial means needed to produce food for Canadians and for export.”
In Alberta, Lynn Jacobson, head of the Alberta Federation of Agriculture (AFA) welcomed Ottawa’s announcements, suggesting that short-term debt relief is desperately needed by agricultural producers in Alberta.
In addition to impacts caused by COVID-19, many of the province’s farmers are still recovering from the loss of important global markets for commodities such as durum wheat and canola.
In addition, difficult harvest condition last fall caused many growers to leave billions of dollars worth of crop in the field over winter, money that would normally be used to pay bills and purchase crop inputs for the 2020 planting season.
“I think they (Ottawa’s announcements) are helpful. They’re definitely something we can work with,” Jacobson said.
“Because of the things that have happened (related to COVID-19) and with the type of harvest that many people had last year, I think this is going to be welcome news.”
At the same time, farmers across the country are continuing to amass debt at a record level, Jacobson said.
Primary producers are dealing with the loss of important international markets, declining net returns and an industry-wide debt level that exceeds $100 billion.
Jacobson said short-term debt relief aimed at helping cash strapped farmers is a welcome development, but the long-term viability of the Canadian agriculture industry must also be addressed.
Improvements to Canada’s existing suite of farm business risk management programs are a top priority, he said.
“To tide our industry over into better conditions, we needed some kind of help immediately … but farmers do have concerns about their debt levels.”
Michael Hoffort, president and chief executive officer at FCC, encouraged FCC clients who are facing cash-flow challenges to contact the organization and discuss potential solutions.
“If you are a producer concerned about having the cash flow required to plant your crop, or you are a food processor feeling the impact of a lost sale due to the financial downturn, FCC is here to support you in these uncertain economic times,” said Hoffort.
Farmers can contact the FCC at 1-888-332-3301.