Who's Financing the Farm?

Agriculture is the foundation business in every country and therefore its financing and viability is critical to people globally. In Canada, we have a major agricultural industry coast to coast feeding Canadians and others abroad. Sectors have struggled and some are in transition. New businesses emerge and traditional forms have had to change. Initially through history the Canadian banks were the key institutions financing family and corporate farms. The trend has changed!
The government owned, Farm Credit Corporation (FCC), now enjoys 27.5% of agricultural financing and their role is increasing annually. The banks, on the other hand, according to an article in The Ontario Farmer have drop in five years from 45% to 35% market share, which is disturbing. Is this a lack of competitiveness or a competitive disadvantage? FCC gets their funding through the government which is clearly an advantage. Consequently, their pricing is highly competitive. Also, FCC not only finances agriculture producers but processors as while.
Competition in any industry is good for the economy. What should be the private and public sector roles in financing agricultural business? Do the elected politicians, mostly from urban centres, understand the rural farming business and its implications for all people? Perhaps the financing trends need to be assessed by all participants to develop the right integrated, competitive approach to always maintain a healthy and vibrant agriculture business.

Pat Palmer | Saturday, July 31, 2010 | Comments (0) | Trackbacks (0) | Permalink