Question Period Note: Farm Credit Canada

What is Farm Credit Canada doing to support producers and processors who are facing financial challenges as a result of COVID-19?

1. On March 23, the Government provided Farm Credit Canada with support to increase its lending capacity by an additional $5 billion.

2. This measure offers farmers and food producers across Canada with greater financial flexibility, during these challenging times.

3. The Government, along with Farm Credit Canada, are committed to ensuring that producers, agribusinesses and food processors have access to necessary capital so they can continue to put quality food on tables across our country.

RESPONSIVE ON FCC’S COVID-19 SUPPORT PROGRAMS

1. Farm Credit Canada has put in place a deferral of principal and interest payments up to six months for existing loans or a deferral of principal payments up to 12 months. Access to an additional credit line up to $500,000 is also available to eligible customers.

2. On May 14, Farm Credit Canada launched a $100-million Agriculture and Food Business Solutions Fund to support proven, viable companies through unexpected business disruptions, such as the COVID-19 pandemic.

RESPONSIVE ON MANDATE COMMITMENT

1. Canadian farmers and food processors feed Canada and the world, and the strength of our economy depends on their hard work and success.

2. We are committed to making it easier for the sector to access the financial and advisory services it needs to grow and expand.

3. Farm Credit Canada is Canada’s leading lender to the agricultural sector. We are building on that success.

4. We are currently working with the relevant federal agencies and Crown corporations to identify options for expanding financial and advisory services to the agriculture and agri-food sector.

The Minister of Agriculture and Agri-Food’s mandate letter contained a commitment to lead the consolidation of existing federal financial and advisory services into a new entity called Farm and Food Development Canada, which would have an expanded and enhanced mandate, accompanied with additional capital lending capability.
Delivering on this mandate commitment will build on the success of Farm Credit Canada (FCC) and its operations. The Government is analyzing the various financial products and services offered by a number of federal and private institutions to the agriculture and agri-food sector to better understand opportunities to enhance support to the sector.

Agriculture and Agri-Food Canada will continue to work with FCC, other federal government departments, agencies and crown corporations to identify opportunities for an expanded mandate.

Farm Credit Canada:

FCC is a financially self-sustained federal Crown corporation reporting to Parliament through the Minister of Agriculture and Agri-Food. FCC lends money and provides other services to primary producers, food operations and agribusinesses that provide inputs or add value to agriculture. They share business management knowledge and training with customers, free of charge, and offer insurance, venture capital and management accounting software, that's designed specifically for agriculture.

FCC is Canada’s largest provider of capital to agriculture, agri-food producers and agri-businesses in rural Canada. FCC’s loan portfolio is of $36.1 B in 2018-19, up from $17.1 B in 2008-09, and has been growing for 26 consecutive years. The organization has 97 offices, primarily in rural Canada, with over 1,900 employees.

In 2018-2019, FCC lent approximately $10 billion in long term financing, and another $10 billion in short term financing, through a range of financial products, including feature-specific loans and credit lines. It earned a net income of $656.7 million in 2018-2019 and paid a $394.8 million dividend to the Government of Canada on September 20, 2019.

On March 23, 2020, FCC received an enhancement to its capital base from the Government of Canada that allows for an additional $5 billion in its lending capacity. This measure was designed to offer increased financial flexibility to farmers and food processors impacted by the COVID-19 pandemic.
FCC has also put in place COVID-19 support programs which include a deferral of principal and interest payments up to six months for existing loans; or a deferral of principal payments up to 12 months. Access to an additional credit line up to $500,000, secured by general security agreements or universal movable hypothec (in Quebec) is also available to eligible clients.

On May 14, 2020, the launch of a $100-million Agriculture and Food Business Solutions Fund was announced. Launched in partnership with Forage Capital Inc., a Calgary-based venture capital firm, the fund is set up to provide a wide range of enterprises with the stability and flexibility they need to rebuild their business models during challenging times. FCC is the sole investor in the fund. The primary goal of the fund is to return recipient companies to a sound financial footing. To qualify, companies need to demonstrate an impact from an unexpected business disruption, such as the loss of a key supplier, temporary loss of a facility or permanent loss of critical staff or leadership. Funds cannot be used to repay shareholder loans or purchase shareholder equity positions.

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