OTTAWA – In this age of government retreat, Canada’s largest farm lobby made a plea to Ottawa that it not consider taking the crown out of farm lending.
Canadian Federation of Agriculture president Jack Wilkinson told the senate banking committee Oct. 19 that the Farm Credit Corporation is needed.
Without competition from a public lender, private lenders would not serve farmers’ credit needs well enough.
“Our basic position is that there continues to be a role for government agencies in lending,” Wilkinson said in a brief to senators. “Indeed, in some areas this role is now greater than it has been in the past.”
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He said public lenders like the FCC can provide “adequate competition in the marketplace where this is necessary,” can take risks that private lenders will not, can implement public policy and can “lead” private lenders by example.
Wilkinson said the FCC can play an aggressive role without becoming an unfair competitor to private lenders and without costing taxpayers money.
“Its advantage in the marketplace is that it does not have to return a profit,” he said.
And its saving grace for farmers is that the FCC continues to serve rural communities where farmers live.
“As the economy changed over the past 20 years, chartered banks left rural communities and agricultural lending in favor of activity in more populous and more easily served centres,” the CFA president complained.
This reduced competition for farmers’ business.
Wilkinson said credit unions have remained the most visible private lenders in rural areas, yet they do not have the resources to become heavily involved in the farm mortgage business.
The senate committee is holding hearings on whether public lenders duplicate or unfairly compete with private lenders.
The CFA leader said Farm Credit, the Export Development Corporation and the Business Development Bank of Canada should be given expanded roles.
