Photo Karen Graham.
Spreaders ready for the growing season.
At last month’s farm show, staff from Farm Credit Canada (FCC) was on hand offering their services to the crowds strolling through the aisles.
They need no introduction to the agricultural community, but the nature and extent of their services is less understood by the general public.
Established in 1959, this federal Crown Corporation was created to support rural Canada by providing specialized and personalized business and financial products and services to farming operations and to businesses in rural Canada that provide inputs or add value to the agricultural sector.
FCC operates with more than 1800 employees in 98 offices across rural Canada, and while it competes with private sector lenders, it has a strategic advantage. Even more than commercial banks, this lender has very deep pockets (remember, the feds can actually print money), allowing staff to take a long term view when it comes to agricultural lending, and offering expertise in small markets that would not be viable for commercial banks. In addition, they don’t have the option of shifting to a different industry when things in agriculture get tough. Because they serve only one industry, their market expertise is unparalleled, and it’s an industry that is becoming increasingly complex and fast moving.
Don’t imagine that because FCC has a supporting role to an industry that faces major swings in its financial performance that the organization represents a financial drain on the federal purse strings. Unlike some of its counterparts, this crown corporation is self-sustaining, recording almost $670 million in net income in the last fiscal year. This is not a one-time event. The balance sheet reflects a retained earnings balance in excess of $6 billion and the corporation pays its owner a healthy dividend every year. In terms of activity, FCC approved 22,438 credit facilities in 2018 and serves more than 100,000 customers and is currently managing a loan portfolio of $36 billion. At the moment, 86% of this portfolio represents loans to primary producers, with the balance to businesses that support farming activities.
As an economic driver for an industry estimated to have contributed $114 billion to our gross domestic product last year, FCC supports the efforts of their customers to innovate, grow and compete in domestic and global markets. To do so, it collaborates with other government agencies including the Export Development Corporation and Business Development Bank, and will work with customers whose credit facilities also include ones from commercial banks.
The organization has recently introduced two new programs that target underserved customers.
The Starter Loan is intended to give young borrowers the independence and financial literacy skills they need, while establishing a solid credit history along the way. FCC’s Starter Loan is a catalyst for young borrowers to take that first step towards achieving their dreams in Canadian agriculture. Loan funds can be used to finance the purchase of assets such as livestock, equipment, or an existing business. With loan values up to $50,000, at preferential rates, with no fees, this program is available for applicants 18-25 years old.
Another program targets women entrepreneurs in agriculture. The Women Entrepreneur Program supports women involved in the agriculture and agri-food sector by providing the capital they need to grow their business, along with the meaningful skill development opportunities they are seeking. It includes loans, enhanced learning events, partnerships with other groups, and delivery of online content to support their needs. FCC has committed $500 million over three years for this program where a portion of their fees are waived and are encouraged to reinvest these savings into both personal and professional development that best suits their individual and business needs.
Farm Credit is a helpful tool available to Canadian agricultural producers designed to ensure Canada remains a leading producer of high-quality, safe food products and a key driver of the country’s economic growth. KG
