Farm Credit reports a good fiscal year

Wednesday, July 24, 2013

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