OTTAWA – The Farm Credit Corporation likely will be given a broader mandate to finance agricultural diversification and rural development projects, says the agriculture minister.
“I think there is a new and broader role for the FCC to play here,” Ralph Goodale said Feb. 16.
He plans to consult farm and business groups during the spring, so legislation can be introduced and approved in this parliamentary session.
Goodale said he would even entertain proposals to allow private investors to buy into the crown corporation, as some Reform Party MPs have suggested. But first he would assess if an FCC with a broader mandate would be able to borrow all that it needs on capital markets.
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First things first
“I’d want to look very closely at how the FCC does with its new mandate before considering the proposals that other investors be allowed in on the act,” he said. “Even then, I would give those proposals a very cautious look.”
Goodale’s main aim is to expand the types of business proposals the crown lender could finance.
For the three and a half decades after its 1959 creation, the FCC could lend only to farmers. Several years ago, it was given a limited ability to move beyond farm borrowers to issue loans to farm-related businesses, as long as farmers control them.
The Liberal government also has increasingly used the Regina-based crown lender as a way to deliver other policies – supporting expansion of the ethanol industry, offering business plan counselling for aspiring farm entrepreneurs and operating the cattle options pilot project.
Now, Goodale thinks it is time to give it a longer leash.
“If we’re saying to farmers they have to adjust, cope with change, deal with a lower level of subsidy and fewer regulations, one of their requirements is access to enhanced pools of capital,” said the minister.
“The FCC could do that, or at least its presence in the market might make other lenders more interested in these projects.”
Goodale said he would expect opposition from some other lenders, as well as a fear by farm groups that expansion would mean loans to farmers would be downplayed.
“I will be sensitive to that unease and I will assure farmers that producer loans will always remain the core, the fundamental core of FCC activities.”
In the 1980s when FCC was losing hundreds of millions of dollars, part of the problem was that it only had farm borrowers and little room to manoeuvre. With a broader range of customers, it would have a more balanced business, Goodale said. After years of losses, the FCC now operates in the black.
Last year, the corporation made its first dividend payment to the federal treasury – $4 million. “It wasn’t large but I can tell you, (finance minister) Paul Martin couldn’t believe it.”
