FCC follows its mandate, but should it be revisited? - Opinion

JUST OVER 20 years ago, then-Progressive Conservative agriculture minister John Wise rose in the House of Commons to announce the end of Farm Credit Corporation’s role as the lender-of-last-resort.

No more would FCC (now Farm Credit Canada) finance high-risk farmers that private lenders would not touch with a 10-foot line of credit.

The crown corporation created 30 years earlier by prairie populist PC prime minister John Diefenbaker to give farmers an alternative to the banks was losing more than $100 million annually, taking high-risk debt that bankers happily passed on.

Read Also

Producers face the reality of shifting grain price expectations

Significant price shifts have occurred in various grains as compared to what was expected at the beginning of the calendar year. Crop insurance prices can be used as a base for the changes.

Wise said the rules were changing.

“Its primary job is to provide long-term mortgage credit to Canadian farmers on a break-even basis,” he said.

Months later, new agriculture minister Don Mazankowski fired FCC president Sonny Anderson, a Liberal, as if he was responsible for the swamp that had been created by the FCC mandate. Mazankowski brought in more conservative folks to make FCC more, well, conservative.

Years later, a fiscally conservative Liberal government poured hundreds of millions of dollars into the Regina-based corporation with the warning that this was it. Sink or swim on the market. There will be no more government help.

There was a quiet instruction that FCC should actually return an annual dividend to Ottawa and Canadian taxpayers.

During the past decade or more, FCC has taken that instruction to heart. It has introduced new programs, pursued new customers, tripled its share of Canadian farm debt and produced annual profits for Ottawa.

“Our mandate is to be a self-sustaining crown corporation and so we no longer take on deals that the banks and credit unions are not interested in,” FCC president Greg Stewart said last week during a Parliament Hill appearance. “That was done many many years ago and we went bankrupt. So our mandate is to be competitive.”

Sonny Anderson and Greg Stewart both functioned within the mandate they were given by the government.

So it was interesting last week to watch MPs be silent as credit union and bank officials used an appearance before the House of Commons agriculture committee to complain that FCC has an unfair, government-supported advantage that it is using to aggressively expand its market share.

It is not odd that private sector farm lenders would complain about FCC. It does have an advantage through access to government funds and the reality (despite previous government warnings) that if credit goes bad, it will not become bankrupt.

But it is odd that MPs who set the political and policy parameters under which FCC operates did not suggest to the private sector critics that they turn their displeasure on the policy makers and not the government lender.

Stewart was exactly correct when he said the corporation uses the tools it has been given to expand its market presence and its profit. That is its mandate.

Credit unions and banks are not off base for complaining about unfair competition.

But the issue in 2009 is whether politicians still believe a crown farm lender is necessary as a counterbalance to private lenders.

Two decades after the government last articulated a role for FCC, it is time to do it again.