Lender’s numbers don’t show farm crisis

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Published: May 10, 2001

There is lots of talk of a farm income crisis but there was little statistical evidence of it when Farm Credit Corp. president John Ryan appeared on Parliament Hill to talk about FCC fortunes.

He told senators and MPs April 24 and 26 that many economic indicators seem to suggest the agricultural sector is largely stable.

FCC lending last year hit a record $1.7 billion.

The corporation’s accounts in arrears as of March 31, were down 300 from year-earlier levels to 2,300. The value of arrears accounts increased marginally to $35.7 million.

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In the cash crop sector, arrears fell by $1 million, although at $21 million it still is the largest sector with troubled debt.

Meanwhile, farm bankruptcies are down and there has been no sharp increase in farmers using farm debt mediation services.

But as the politicians were preparing to question whether those statistics were offering an accurate picture of the farm economy, Ryan quickly qualified them.

“Our intention is not to indicate all is well,” he told the House of Commons agriculture committee. “There are continuing problems.”

To senators, he said the figures show agriculture overall remains a strong industry but “it is not to leave you with the impression all is well in the agriculture industry…. In some cases, the problems are severe and it takes a lot of work to bring producers through some very difficult times.”

He said FCC recognizes some producers are struggling with “prolonged low commodity prices, high input costs and in some cases trade bans and barriers.”

Ryan said the Regina-based crown corporation tries to help producers in trouble by making their repayment schedules more flexible or finding other ways to help them.

Several MPs questioned if the corporation’s arrears figures are improving because it is restructuring debt to make it easier to service. That would be a way to reduce arrears without really improving the economy.

Ryan told Progressive Conservative MP Rick Borotsik that little more than $100 million of last year’s $1.7 billion in new lending was part of debt restructuring. He said it was no more than usual.

Liberal Murray Calder came at it from the opposite angle. Perhaps FCC numbers are looking better because the corporation is not lending to higher risk farmers, thereby reducing its bad debt exposure.

“You guys raised the bar,” he said. “No loan, no problem.”

Ryan denied that the corporation is improving its statistics by “raising the bar.” But he said FCC evaluators do consider risk before they approve a loan for a struggling operation.

“More debt at times is not the answer,” said the FCC president.

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