Farmers continue to expand their operations despite being confronted by an array of difficulties, says Canada’s largest agricultural lender.
Farm Credit Canada doled out a record $3.4 billion in new financing during its 2003-04 fiscal year, taking its portfolio to a little more than $10 billion, a 14 percent increase over the preceding year.
“(Farmers) faced many challenges in the agricultural environment this year, such as BSE, a rising Canadian dollar, avian flu, weather and poor commodity prices,” said FCC president John Ryan.
“And yet they continued to show their passion for agriculture and put their faith in us as a financial partner.”
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Greg Stewart, FCC’s senior vice-president of national operations, said many producers still see opportunities in agriculture and are continuing to expand their farms.
“Certainly not all the sectors in the country are in trouble,” he said.
Loans to the crops and value-added sectors soared, with annual approvals rising 20 and 18 percent respectively. Dairy was another bright spot with $822 million in newly issued credit, up from $763 million in 2002-03.
Beef was the only category that stumbled, falling 25 percent to $300 million from $398 million the previous year despite the implementation of FCC’s customer support strategy designed to help cattle producers through the BSE crisis.
Stewart said loans to cow-calf operators were stronger than expected but there was a significant drop in the amount of credit extended to feedlots.
“Our dollar value decreased because the price of those cattle has gone down,” he said.
A marginal increase in past-due payments accompanied the expansion of FCC’s loan portfolio but the amount in arrears is still well below the target of 0.7 percent of outstanding loans.
A 12th consecutive year of growth is projected for 2004-05, with the government lender already $100 million above last year’s pace.
“We’re anticipating another record year for us,” Stewart said. “Things continue to look reasonably good.”
There have been signs of optimism in the cattle sector since the federal government announced its $488 million BSE aid package on Sept. 10. Ranchers are now talking about getting $1 per pound for their fall calves instead of 70 cents or less, said Stewart.
The early outlook for the crop sector was “very, very good” but that was tempered by the Aug. 20 frost that struck much of Manitoba and Saskatchewan.
All things considered, 2004-05 should be another year of considerable expansion for FCC’s customers, many of whom are small farmers.
“We’re more than halfway through the year and things are going very well,” Stewart said.
