Saturday, March 12, 2016

FCC increases funding for young farmers

Farm Credit Canada is adding $500 million to its fund to finance young farmers, bringing the total to $2 billion.

The program the FCC launched in 2012 has already loaned $1.3 billion to farmers younger than 40.

Most use the loans of up to $500,000 to buy assets, such as land, buildings and quota.

I find this eerily similar to the early 1970s when farm prices and profits were rising and farming-family sons got interested in farming.

Farm Credit Canada adopted a relatively aggressive lending policy for them, they went head over heels into debt and then the markets turned.

Crop and livestock prices dropped and interest rates climbed.

The result was a record number of farm bankruptcies, including almost all of those young farmers who had scant equity. And the Farm Credit Corporation, as it was then called, was technically bankrupted, saved only by more than $1 billion in federal support.

The catastrophe was tragic. There were suicides. New counselling services were established. 

I say, yet again, that the federal government should sell Farm Credit Canada so shareholders, not taxpayers, take the hit for its aggressive lending.