Download (PDF) - The Western Producer

44 FEBRUARY 21, 2013 | WWW.PRODUCER.COM | THE WESTERN PRODUCERNEWSTHINK-TANK | FARM CREDIT CANADARein in crown lender: reportC.D. Howe Institute thinks it is time that Farm Credit Canadaagain became the lender of last resortBY BARRY WILSONOTTAWA BUREAUThe business-oriented C.D. HoweInstitute has stirred up a fierce debateby arguing that Farm Credit Canadaprovides unfair competition for privatelenders and should be reined in.The Toronto-based think-tankissued a report early this month arguingthat the crown corporation has anunfair advantage over commercialcompetitors and should have a mandatereview and tougher regulatorycontrol.It also suggested FCC should revertto the lender-of-last-resort position itheld until the late 1980s when thefederal government bailed it out ofhundreds of millions of dollars ofdebt and instructed it to operate inthe black and pay an annual dividendto Ottawa.“The traditional lender-of-lastresortrole … should be consideredfor all crown financial corporations,”said the Howe commentary.“This former legislative role encapsulatedwell the concept that crownsshould not compete with privatelenders and insurers.”The think-tank said its recommendationwould make the crown portfolioshigher risk, but “it would limittheir size and the extent to whichthey crowd out private market activity.”Credit Union Central presidentDavid Phillips said FCC has an economicadvantage over private lenderssuch as credit unions because ithas access to cheaper funds and doesnot pay income tax.“It is an interesting report and weare in agreement with some aspectsof it, and the issues it raises areimportant,” he said. “They clearlyhave a competitive advantage thatwe find unfair. We certainly think amandate review is a good idea.”FCC and its supporters rejected thereport’s premise of unfair advantageand its recommendations.FCC executive vice-president andchief executive officer Remi Lemoinesaid the corporation’s ability to borrowfrom government at cheaperthan-marketrates does not give it amarket advantage.“We do not pass those savings ontoour customers,” he said. “We have abalanced portfolio and our marketshare has grown because agricultureis our sole focus.”He said a parliamentary review ofthe FCC mandate is not necessary.Canadian Federation of Agriculturepresident Ron Bonnett agreed.Bonnett, who is both an FCC andcredit union customer, said FCCoffers farmers a full range of optionsand has shown its financial loyalty tothe sector.“In our opinion, they bring competitioninto the system and they arethere through thick and thin,” hesaid. “For some other lenders, whenthings are good they are there butwhen there is a blip, they run awayfrom the sector like scared rabbits.”Former Liberal agriculture ministerRalph Goodale said the proposalto return FCC to the status of takingon customers that commercial lendersfind too risky is a non-starter.“That is a recipe for failure, and FCCadds financing stability,” he said.“The trouble with relying on privatelenders only is that they are in whentimes are good and out when timesturn. There is no commitment toservice agriculture.”Credit unions and chartered banksbeg to differ and have been wooingfarm groups through sponsorships atThe trouble with relying on private lenders only is thatthey are in when times are good and out when times turn.There is no commitment to service agriculture.RALPH GOODALEFORMER AGRICULTURE MINISTERconventions and contributions tocommunity events.For example, Bank of Montrealagriculture manager Karl McLarenwas given the podium as a primeDairy Farmers of Canada sponsor atthe association’s recent annualFILE PHOTOmeeting to extol the extent of thebank’s partnership with and supportof the dairy industry.The Howe report said FCC’s shareof farm debt almost doubled in 20years to 29 percent in 2011, helpingpush farm debt to record highs.AG EXPOPresented by Farm Credit CanadaNorth AmericanSeed FairPresented by Fortis AlbertaFeb. 27 - Mar. 1 9 to 5 pm dailyLethbridge, AlbertaBayerCropScience.ca/Velocitym3 or 1 888-283-6847 or contact your Bayer CropScience representative.Always read and follow label directions. Bayer CropScience is a member of CropLife Canada.www.exhibitionpark.caTel. 403 – 328 – 4491