by SUSAN MANN
Farm Credit Canada’s board hasn’t yet decided how much of its $513.4 million profit it will forward as a dividend to the federal government, but according to approved policy it can pay up to 10 per cent, says a spokesman.
Remi Lemoine, chief operating officer, says that means FCC can pay up to $51 million to the government but the board will decide the actual figure at its next meeting in August. The rest of the profit is reinvested in agriculture “through increased lending to customers and the development of agriculture knowledge, products and services,” FCC says in its July 19 press release.
Farm Credit’s profit was one of the numbers released as part of its annual report for the 2012/13 fiscal year. During the fiscal year, FCC disbursed $7.7 billion to farmers, processors and suppliers along the agriculture value chain through 47,000 loans with an average value of $162,000. As a result, FCC’s loan portfolio grew by almost $2 billion to $25.1 billion.
Other financial highlights include:
- Improved allowance for credit losses at 2.5 per cent of loans receivable, reflecting reduced risk in the loan portfolio and a strong agricultural economy.
- An improved debt to equity ratio of 6.7:1 indicating continued financial strength and an ongoing ability to serve the agricultural community.
- Continued support for the industry’s customers needing alternative financing with $73.4 million in venture capital investments.
Lemoine says the 2012/13 fiscal year wasn’t FCC’s highest income-earning year but it was one “of the better years.” Last year was their highest income-earning year, but “there were a couple of one-time items in there that if you take them out it probably makes this year better from an income perspective.”
In the agricultural industry as a whole, conditions are fairly stable and solid, which is important for FCC, he notes.
“We always have some challenges in some part of the country in agriculture, but overall things were pretty good. We had a good crop year across the country last year and things are pretty stable in most sectors,” he notes, adding “we’re seeing a little bit of recovery in the hog sector but it’s still up and down.”
FCC doesn’t have any immediate plans to introduce new products but it continues to promote the young farmers’ loan program it introduced a few years ago.
In 2012/13, FCC provided $2.3 billion to Canadian producers under 40 years old to finance their future. FCC’s Young Farmer Loan was also launched to inject a new $500 million in agriculture enabling young farmers to purchase or improve farmland and buildings.
Ron Bonnett, president of the Canadian Federation of Agriculture, says it’s interesting to note FCC is really focusing on young farmers. “I think what’s interesting especially with some of the young, aggressive farmers is they might have gone and got a business degree and maybe worked in another sector and then came back to the farm with a whole skill set so they can really apply strong business strategies to the operation.”
Supporting young and new farmers is also important to the CFA, which outlined a number of solutions to eliminating barriers for new farmers at its Tripartite Roundtable last week during the federal, provincial, territorial agriculture ministers meeting in Halifax, Nova Scotia. BF
Comments
"we're seeing a bit of recovery in the Hog sector bit its still up and down"
..is that not a statement of historic preportions !
Sort of brings to mind the fact that many times it is head down and moving forward at all costs . FCC being Gov run lines up with how gov likes to announce , re-announce, and annouce again when they are giving money out .
FCC should now that the pork industry is an up and down price industry . Maybe the staff has changed and we have a new one here with no prior experience .
I would extend caution to every one that banks may well take a different approach to Ag in the near future if land prices start to decline . Make sure you are not over extended . Equity can be here today and gone tomorrow .
The first line of the story is telling of the fact that there are not as many hurdles for young people to enter into agriculture . " with young farmers strongly in the mix " I know it will not be seen the same by every one and more so those who can't see how they can start but it does tell that some are taking the plunge and not being held back . It would be nice to see how the younger mix is split up across the country .
I watched a video the other day that showed a young guy out of the USA and how hard it was for him to get started . The thing that got me was the fact that it seemed like his parents were not willing to give up any land for him to farm . He had to rent his own . His parents looked to be in their late fifties any way and owned 1400 acres . Really now could you not help him with some of your land to start ?
As the older generation we really have to watch how we program our young people by telling them there is no money in agriculture when many parents are sitting on millions . You can't take it with you . You might enjoy watching and helping the next generation carry on where you left off . If all you hear is negative comments and no money you surely will turn people off from wanting to farm . The big bills like mortages don't kill you , it is all the small ones that add up and throw a wrench in your financial projections .
It's interesting how the generations handle things differently. My grandparents sold my father their home farm for $1 and lived very frugally for the rest of their lives so he could get a good start. When it came time for me to take over, his thinking was that we should take the market value and add 10%, since it should be worth more to me than anyone else to due "sentimental attachment". That was an interesting place to start out from.
I take it that you did buy it . Good for you . It must have been challenging to say the least .
Many older persons years ago lived very humble simple lives . It is not that they did not ever do any thing but they watched every penny because they grew up doing that . My how things have changed .
The Family Farm or The Homestead is I will say some what sentimental but when buying a farm it is a business decision . There are no friends or family in business . Same at an auction sale .
FCC's balance sheet could change in a hurry. Ontario farmland value is an artificial number based on government protections like ethanol, SM, and subsidies to green energy, and grains, pork and beef. Many like to talk about a farms net worth as a measure of its financial health. I think that a better measure of financial health is the total debt of a farm, or debt to income. In the event of a crash, or a change in gov protection, your net worth can decease substantially while your debt will not. Also in the event of a crash caused simply by increasing interest rates, which are also artificial, your debt will increase at the same time your net worth will decrease. Raube Beuerman, Dublin, ON
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