SASKATOON – It would be a waste of money to pay the $1.6 billion Crow buyout to individual farmers, said a member of a Calgary investment firm.
Instead, farmers should pool their money and form a farmers’ bank or trust company, said Zed Caput with Westline Guaranty Financial.
“The $1.6 billion would just be wasted if given to farmers as a one-time deal.”
Caput said the biggest problem facing farmers is lack of credit. By pooling their money in a farmers’ bank, farmers would not have to rely on the whims of bankers for access to money.
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“We can show the banks in the country they’re not God,” he said.
Caput has written federal finance minister Paul Martin and Reform party leader Preston Manning suggesting farmers be given the option of forming their own bank with the one-time Crow payout. Westline is a brokerage firm dealing with loans and investments.
Caput said if farmers accept the idea, the money could be placed in Guaranteed Investment Certificates and the bank could operate on the interest. When the farmers went to their regular bank, they could point to their membership in the farmers’ bank as collateral.
“We could act as a guarantor,” he said.
It’s estimated farmers will get about $10,000 for their share of the Crow Benefit. Caput said he thinks the $10,000 would have more leverage with the banks if it was left in a lump sum.
“They could use the leverage of the money to get more money in their pockets,” said Caput.
Some disagree
Not all are as keen as Caput about the idea.
Farm consultant Ralph Ashmead doesn’t think farmers’ biggest problem is lack of credit. But without the export subsidy, farmers will be searching for different types of credit for value-added processing.
“When you start talking about agribusiness financing that’s where they’re going to run into problems,” said Ashmead, of Calgary.
Ashmead agreed the money would have more value if it was pooled, but it may be more appropriate as venture capital funding.
Jim Hewitt, former head of the federal government’s Farm Credit Corporation, said he thinks the best way to distribute the money is to pay individual farmers.
“I think farmers are pretty darn good businessmen,” and will know how to deal with the money, said Hewitt.
He said there is no need to “reinvent the wheel” by forming another member banking co-operative. Hewitt said a bank with $1.6 billion assets would be fairly “insignificant.” FCC has only $3.6 billion in assets.
