Strong market returns in a number of farm sectors last year helped the federal agricultural lender Farm Credit Canada to boost business and to post record profits.
The Regina-based federal crown corporation reported last week that it recorded net income of $565 million in the fiscal year ended March 31, a 23 percent increase over year-earlier results and a 20.9 percent return on equity.
It is Canada’s largest farm lender with a market share of close to 29 percent.
Current results are in contrast to FCC financial fortunes several decades ago when it ran huge deficits as the farm lender of last resort.
It led to a large government bailout and an order from Ottawa that in the future the lending agency must pay its own way and develop a sustainable business plan.
Last year’s results included $7.1 million in new loans, a $1 billion increase over the previous year and the 19th consecutive year of growth.
“This accomplishment is a clear indication of the corporation’s connection with its customers and ongoing confidence in FCC as their financial partner of choice,” agriculture minister Gerry Ritz said in the corporation’s annual report. “It also shows that FCC shares the government’s vision of investing in the long-term growth of Canadian agriculture and agri-food by building new markets, supporting young producers and ensuring that customers have access to the tools they need for success.”
FCC president Greg Stewart said $1.9 billion in loans to young farmers represented more than a quarter of new loans made last year.
The corporation’s record financial results were mainly a reflection of buoyant farm incomes, the FCC said in its annual report tabled with Parliament.
“In 2011-12, Canadian agriculture experienced growth and most enterprises enjoyed a profitable year,” said the FCC report. “Farm cash receipts improved over the previous year, farm assets appreciated in value and producer optimism was high. This created a robust demand for agri-business products.”
This in turn created a demand for farmer borrowing that raised farm debt last year to a record of almost $70 billion.
The lender argues it is productive debt aimed at raising agricultural profitability, more than covered by rising farm asset values and reflected in falling percentages of debt at risk or in arrears.
FCC was criticized during the past year by a senior credit union executive for what credit unions see as an unfair advantage afforded FCC because of its access to lower-cost government borrowing rates.