Ontario doubles feeder cattle program's purchase loan limits
Saturday, April 11, 2015
by JIM ALGIE
After doubling individual loan limits in a long-standing Ontario government loan guarantee program for feeder cattle purchases, the province should also expand the program’s total guarantee, two leading Ontario cattle farmers said, Friday.
Ontario Minister of Agriculture Jeff Leal announced doubling of individual loan limits, today, under terms of the 24-year-old Ontario Feeder Cattle Loan Guarantee program. The partial guarantee available for loans by 18 feeder finance co-operatives in the province helps the groups negotiate favourable terms with commercial lenders for their 900 individual members, many of them young farmers. Leal’s announcement boosts individual loan limits to $100,000 for newcomers and $500,000 for existing members.
Without a similar boost in total provincial guarantee beyond the existing total of $130 million, however, the program won’t add all that much expansion in cattle production, Ontario Feeder Finance Co-operative President Reg Campbell said in an interview, Friday.
“We’ve been pushing to get the guarantee doubled,” Campbell said from his Ottawa-area farm. “We haven’t got that that I’m aware,” he said of BFO efforts to convince the province to boost the total guarantee.
In a statement issued today, both Campbell and Beef Farmers of Ontario President Bob Gordanier praised the government’s move on individual loans. In separate interviews, however, both men urged further government moves to increase the totality of the guarantee.
Local directors who are co-op members and also supervise their loan portfolios have a strong financial track record. Now in its 25th year of operation, the program has never required “a dime” of government spending, Gordanier said. That, together with strong demand lately for beef cattle, makes the business case for an expanded guarantee, he said.
“This is a great thing that Minister Leal has done,” Gordanier said of the increase in individual loan limits. However, he added the existing global limit on the program means “there’s not a lot of money left out of that $130 million.”
It’s partly because cattle prices have risen dramatically over the past 18 months. Two years ago, individual program limits would secure financing for 240 head of cattle. The same money today allows the purchase of only 160 head.
“That’s the biggest problem here and that’s what we’re working on,” Gordanier said of continuing work to convince the government to expand the totality of the program.
In a statement, Leal described the individual loan limit increase as “a positive step forward for beef farmers in Ontario.” The increased limit was “a request by industry and is a result of growth across the beef sector over the past decade,” Leal said.
Asked today about Beef Farmers’ recommendations for a higher total guarantee for the feeder finance program, a spokesman for Leal hinted at further future developments in beef cattle policy. In a statement emailed to Better Farming by Leal’s spokesman Bryan Bossin, the minister is quoted to say BFO “worked collaboratively” with the government and identified increased loan limits as “critical to helping producers grow their operations.”
The minister expressed thanks to Beef Farmers’ representatives “for their advocacy on this issue” and said he looks forward to “continued collaboration over the coming months.”
A report in Beef Farmers of Ontario’s 2015 annual report shows a total of 95,713 cattle purchased through the program last year. In 2010, the total number of cattle purchased was 106,514. At the time the annual report was published in February, 87 per cent of the $130 million loan guarantee allotment had been committed.
“It doesn’t change anything,” Campbell said of the increase in individual loan limits. In some areas of the province, coops are fully committed with waiting lists, he said.
“They’re maxed out in some cases. They’re waiting for one guy to pay off his loan so the other guy can get started,” Campbell said. BF