Back in 1959, the Canadian Government passed the Farm Credit Act to establish the Farm Credit Corporation (FCC) and gave it $8 million of capital in order to provide a single loan product at a set rate of five per cent interest.
Today, FCC stands for Farm Credit Canada, and that’s not all that has changed. In 2012, total agricultural debt in Alberta alone was $15.9 billion, of which FCC’s market share was 27.22 per cent, or $4.3 billion, an increase of 255 per cent over a dozen years.
“Individually, no other institution or organization has as much of the agricultural lending market share as FCC. All five chartered banks together have slightly more market share but no one individually is anywhere close,” says Clem Samson, FCC’s vice-president for B.C. and Alberta south operations.
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Samson attributes FCC’s rapid growth to agricultural knowledge, increasing creativity, and a name for offering dollars in both good times and bad.
“We have really grown as a trusted partner with producers. Our one focus is agriculture. We understand agriculture’s dynamics and cyclical nature, that on average every four years there will be some sort of challenge to farmers,” Samson says.
“We lend to all sectors of agriculture at all times. If there is a specific sector that is struggling, we continue to lend to that industry and work with them to try to help them move forward. For example, during BSE we continued to lend to beef producers.”
Over the past few years, crop commodities including cereal grains, pulses and oilseeds have seen strong prices. As such, interest and expansion in the sector are booming, generating strong lending demand. “Right now, the primary sector we lend to in Alberta is the crop sector. Second would be supply-managed commodities including dairy and poultry, and right behind that is the beef industry. The beef industry has been somewhat flatter after BSE because some inventories decreased and some producers left the sector,” says Samson.
Peace Region expansion
Likewise, loan activity is concentrated in geographic pockets and corridors that are seeing particularly good returns. Asset values are high in the corridor between Edmonton and Calgary, in irrigated lands down south, and in areas with a strong concentration of dairy.
However, the strongest growth in activity is coming from another area entirely — the far north.
“Things are going very well throughout the province, but the most activity we are seeing is in the north country, from Grande Prairie all the way up to La Crete which is just an hour and a half from the Northwest Territories. We’ve just opened a full-time office in La Crete, and agriculture is booming up there,” says Samson.
“Everyone seems to think that once you get past Edmonton, it all just turns into bush. I don’t think a lot of people realize that some of the best farmland in the country is situated up north of Grande Prairie in the Peace region. Land values are certainly appreciating up there, but there’s been quite a bit of activity because land has been more affordable.”
Samson says alhough FCC’s mandate of supporting agriculture remains unchanged, its product offerings evolve as times change. A major focus of the last decade is an increasing involvement in producer education, from workshops to learning tours to online learning opportunities.
A second change is FCC’s increasing relationship with agri-food and agribusiness.
“In early the early 2000s, we took on a very strong focus on value-added opportunities. Our mandate is that we’re still there for the primary producer, but we feel in lending to agri-business and agri-food, we can help on both sides of the farm gate to make primary producers successful,” says Samson.
“We’re now lending to businesses that, on one side of the farm gate, give producers the goods and services they need to grow high quality crops: the crop input providers, the farm machinery people, the livestock trucking companies. Then, on the other side of the farm gate, we’re supporting businesses like food processors or alternative fuel companies that will give producers markets for their products.”
