Finance Canada’s Office of the Superintendant of Financial Institutions is subjecting Farm Credit Canada to a “risk assessment” even as agriculture minister Gerry Ritz issued a robust defence of FCC.
“I expect Farm Credit to continue to play the dynamic role they play in the farm sector in Canada,” Ritz said during a conference call from Tokyo March 11 during a trade mission. “They work from a pool of money, not government guarantees as the banks keep saying.”
Ritz said he would like to see the federal Regina-based crown corporation expand to cover more sectors of the agriculture value chain.
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“They’ve grown out and expanded their portfolio exponentially and I want to reassure Canadians in doing that they don’t have money at risk,” said the minister. “That’s what the review for OSFI is all about.”
The review comes weeks after the business-oriented C.D. Howe Institute research centre issued a report that criticized FCC as a high-risk lender that unfairly competes with private lenders because it has access to low-interest government borrowing rates.
Banks and credit unions agreed that the crown corporation does have unfair advantages with access to cheaper government money and should be subject to a mandate review.
FCC insists savings from lower interest borrowing are not passed on to farmers in cheaper borrowing rates.
However, it remains unclear if the OSFI review is routine and scheduled, a response to the C.D. Howe report or a request from Finance Canada.
Repeated requests to several departments drew only vague responses to the question of why the review is happening.
“Government entities are routinely examined as part of proper oversight,” said a Finance Canada official.
