Canada’s farm equipment dealers last week pleaded with MPs for more government help with credit and financial support for a farmer switch to environmentally friendly models.
The sector said support for the industry should be part of the government’s recession-fighting economic stimulus package.
It argued the competitiveness of the equipment sector and agriculture is at stake without government help.
John Schmeiser, vice-president of Canadian government affairs for the North American Equipment Dealers Association, told members of the House of Commons agriculture committee June 2 that higher farm income and crop prices made 2008 a good year for farm equipment sales.
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“Every category of farm equipment saw an increase in sales in 2008 over 2007,” he told MPs.
Early indications are that 2009 will not be as good.
“We look forward to the rest of the year with cautious optimism and are hopeful that commodity prices will rise and the weather will cooperate.”
But Schmeiser said there are looming issues in trying to compete with the industry in the United States.
Several American jurisdictions including California are moving to a requirement that engines be less carbon emitting. There will be American incentives to help farmers adapt.
“To keep the Canadian farmer competitive, we believe financial incentives are needed as we transition to newer, cleaner farm equipment,” said the industry spokesperson.
“Such support at the federal level would place Canada as a leader in reducing pollution emitted from farm equipment.”
Schmeiser also repeated industry arguments that the federal government should increase the pace at which farmers can apply capital cost depreciation against large equipment purchases.
“Today’s farmer and the innovative farmer of the future are trading in their equipment at a faster rate than in the past,” he argued.
“An increase in the depreciation rate is warranted to reflect the current purchasing pattern. As we are starting to see declining sales numbers in 2009 and the government is looking at areas to stimulate the Canadian economy, such a change should be considered.”
The NAEDA vice-president said while farmers continue to have credit lines, dealers financing equipment purchases have been hurt.
“The most challenging issue facing the farm equipment industry today is credit availability.”
While the last federal budget and subsequent policy announcements have dealt with the general credit crunch, none of the measures help the farm equipment industry.
“In the 2009 federal budget, the government announced a new $12 billion secured credit facility that would be administered through (a government agency),” said Schmeiser.
“The terms of reference of this new initiative place our industry outside the lending parameters. At present, this program does not provide any relief for our industry.”
He said the lack of credit threatens to limit industry growth.
“The credit availability crisis is threatening the momentum that we saw in 2008 as well as the entrepreneurial spirit of Canadian agriculture,” Schmeiser told MPs.
“This ultimately will severely limit the growth of the Canadian farm equipment manufacturing and equipment sales and subsequently reduce the competitiveness of Canadian agriculture. Our industry is not looking for a bailout, just access to capital at a competitive price.”
