HomeMy WebLinkAboutThe Citizen, 1990-12-21, Page 34PAGE 34. THE CITIZEN, FRIDAY, DECEMBER 21, 1990.
Farm finance committee told it’s
time to rethink rural investment Farm.
Farm groups and individuals
attending the Agriculture Finance
Review Committee hearing in Lis-
towel Dec. 5 told the politicians the
Province has to rethink the whole
farm investment system that now
exists.
Over 100 farmers, from Huron,
Perth, Wellington, Grey and Bruce
crowded the banquet room of the
Country Inn, north of Listowel to
present their views to the commit
tee of NDP panel headed by Pat
Hayes, M.P.P. for Essex Kent.
Other members include Ellen Mac
Kinnon, Lambton and Fred Wilson,
Frontenac-Addington.
The message from the farmers is
“becoming an emerging theme”,
Mr. Wilson said after the fifth of a
series of 10 meetings scheduled
across the province. Farmers said
the province must build on the
reserves of rural Ontario to help
save rural Ontario from the double
whammy of high cost credit and
low commodity prices which is
driving established farmers off the
land and scaring young people
from even considering farming as
an occupation.
The case for government incen
tives to encourage investment in
rural communities, rather than
watching rural investment “flow to
the big city” was put forcefully by
Gary Nelson, representing the
Wellington-Grey Federation of
Agriculture.
Noting Ontario farmers are as
efficient as any in the world, Mr.
Nelson said farmers don’t need
hand-outs. “We have the resources
and opportunities to solve our own
problems.”
Following the Second World
War, up until the 1970s, he said,
financing for agriculture came from
the family and the community. In
the 1970s, “traditional financing
dwindled on the vine,” as big
institutions realized there was
money to be made loaning money
to farmers.
As long as commodity and land
prices remained high, Mr. Nelson
said “everybody was happy”.
“Leverage was the key to suc
cess. If you weren’t levered you
were nobody in farming.”
With the lowering of both com
modity and land prices, Mr. Nelson
said, the “happy situation” for
both financial institutions and far
mers came to an end in the 1980s.
During the 1970s, investment
from rural Ontario, instead of going
to the farm down the road, went to
the big city in the form of GlCs and
RSPs.
As a resuit instead of getting
credit from people understanding
agricultural problems, big institu
tions are indifferent to farmers
problems, and according to Mr.
Nelson, “remarkably unsympathe
tic to low equity farmers.”
What is needed, according to the
brief submitted by the Wellington-
Grey Federation of Agriculture, is a
mechanism providing security for
people willing to invest in rural
communities.
Mr. Nelson said he believes rural
investors “and there are a lot of
them out there” would even be
willing to accept lower interest
rates “not much lower, mind you,
but a little lower” as long as they
knew their investments were se
cure. He suggests something akin
to CMHC-type investment or Agri
bonds should be initiated by the
province.
At the kame time, Mr. Nelson
said farmers need a strong safety
net in conjunction with their oper
ating credit. Programs such as crop
insurance, he said, are “just a
laugh" as far as bankers are
concerned.
“It's time we looked in our own
backyard to solutions to our pro
blems," he said
. Throughout the night a number
of people, including some who
worked with farm debt review
boards, severely criticized all major
banks and the Farm Credit Corpor
ation.
Criticism included lack of under
standing of farmers’ problems and
charges of unfair and unequal
treatment of individuals. A number
of people blasted banks for what
they said is a current practice of
charging exorbitant fees in connec
tion with loan applications by
farmers.
Allen Emmerson of the Tillson-
burg area said he has been
involved in farm debt review work
for many years, dating back four
years before the act was passed
and involving the restructuring of
approximately 1,000 farms.
If there is one thing he has
learned, he said, it is that there is
no consistency in agricultural fin
ancing.
“There is anything but (consis
tency). And if I can’t find out the
guidelines, I don’t see how the
individual farmer can be expected
to.”
Mr. Emmerson said many banks
now are putting interest rates on
loans to farmers deliberately high
because they don’t want farm
business?
“Rates of prime (interest) plus
five per cent are not uncommon.”
At the same time, he added, large
multi-national companies involved
in agriculture get preferred rates of
interest. As a result the family farm
is being forced out of business
while agribusinesses are thriving.
Mr. Emmerson advised farmers
to unite to form buying groups.
He questioned federal regula
tions which allow banks to lend up
to 12 times the amount of money
they have as cash on hand. And he
said credit unions must be allowed
to loan out much more than they
now can.
“The way it is now a credit union
can’t loan a farmer enough to buy a
top-notch tractor.” He suggested
such user-controlled institutions
should have the power to loan up to
a half a million dollars to an
individual in agriculture today.
Along with many of the speak
ers, Mr. Emmerson had harsh
words for banks which think noth
ing of loaning someone $125,000 to
buy a house in town, or a young
man $25,000 to buy a sports car,
but won’t loan money to farmers to
replace equipment.
On the subject of fees being
charged by banks in connection
with loan applications by farmers,
Mr. Emmerson sai0 he has seen
fees as high as $3,000 being
charged, some in advance, “with
no guarantee the farmer will get
the loan.”
It isn’t unusual, he said for banks
to add what amounts to another two
per cent to the interest charges for
“fees”. Such “hidden fees”, he
Continued on Page 35
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