OTTAWA – The House of Commons last week moved quickly to approve in principle a doubling in the size of the farm improvement loans fund.
Once approved in final form, the legislation will allow the farm improvement and marketing co-ops loan program to continue. It will increase the maximum federal liability to $3 billion.
“If we do not, the program could reach its $1.5 billion cap in June of this year and then we would have to suspend the program for about two years,” said Lyle Vanclief, parliamentary secretary to the agriculture minister, in the Commons.
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The program allows farmers and their co-operatives to borrow money more cheaply from banks and credit unions. The federal guarantee behind the loan lowers the cost of borrowing by as much as half a percentage point.
Vanclief said use of the program has increased sharply in recent years, mainly in Alberta and Quebec.
As much as $550 million a year has been lent in recent years and 18,500 loans are now registered.
He said fewer than one percent of the loans have been subject to default.
Saskatchewan Liberal Bernie Collins (Souris-Moose Mountain) offered a concrete example of the program at work.
Farmers in his riding formed a co-op to import hog breeding stock from Holland, using the program to finance the investment. “It will be the first entry of continental European hogs into Canada in 37 years.”
Opposition MPs opposed the bill but did not try to delay it.
Bloc QuŽbecois MP Jean-Guy ChrŽtien said it is a good program but also an example of unnecessary duplication between levels of government, since Quebec also has a farm loan program.
Reform MP Allan Kerpan (Moose Jaw-Lake Centre) said the government should not be interfering in the lending business.
“As long as this government or any government continues to participate in this kind of financial activity, I do not believe that the private sector will ever become motivated enough or competitive enough to provide the financial services the agriculture sector needs,” he told the Commons. “Why should they?”
