The Rural Voice, 1982-07, Page 44etace eaafetv 9edeeitatioo ifrdealteva
On May 3, Bruce and Grey County
Federations of agriculture held an emer-
gency joint executive meeting to discuss
an open letter to the Minister of Finance
from the Canadian Federation of Agricul-
ture. This letter outlines the problems
caused by the current high interest rate
policies and suggests some possible
solutions. The letter forms the basis for a
presentation to the federal government
(June 19) by sixty prominent farm leaders
from across Canada.
The county executive members present
decided to support the CFA position, but
felt that every county federation should be
represented at the Ottawa meeting. The
letter follows:
OPEN LETTER TO THE MINISTER OF FINANCE FOR CANADA
The Canadian Federation of Agriculture
Dear Mr MacEachen:
The current level of interest rates is destroying the security and livelihood of many thousands of Canadian farmers. It is threatening to
fundamentally alter the very structure of the industry, undermining its family farm base.
(i) Depressed returns to farming for most of the industry cannot support any significant level of indebtedness, even for current
operating purposes, at present interest rates.
(ii) New investment at current rates in the industry is for most out of the question - especially for new entrants.
(iii) Previously acquired indebtedness has increased in cost 75 - 100% for many and there is no way it can be repaid at today's prices or
those in prospect.
The result: not only great hardship among progressive producers, but forced selling of family farms without family farm buyers. Land is
forced into the hands of corporate owners, absentee owners. and integrators. undermining the fundamental social and economic basis of
the industry.
This is bad for today's farmer, and bad for the future of the industry.
The long run public interest is not being served in these conditions. In important ways the problems facing agriculture are unique. The
consequences of allowing present policies to continue are in large part irreversible.
The Federal Government says its high interest rate policies are essential and unavoidable in present circumstances. We find it difficult
to accept this. The consequences are widespread and damaging to our whole economy. If, however, we must accept this judgement, action
to protect the farm.ug industry from at least the worst of its consequences must be taken, immediately. Canadian agriculture, operating in
an international competitive environment for the most part, is unable to control its own prices, is under threat.
The policies of the Federal government to address this issue have been either token or deceiving, in particular the Small Business Bond
policy of tax concessional lending by its banks. This policy might and should have been a real help. It has instead turned out to be only a
cruel deception on farmers who greeted the policy with hope, only to find it a delusion. Requests to the Ministers of Finance and
Agriculture to inform us of the true facts about the policy are ignored. We can find no evidence that lending to farmers under the Small
Business Bond policy is operative at more than an insignificant level.
The Canadian Federation of Agriculture therefore urgently calls on the Federal government, and the Members of the Parliament of
Canada, to replace the Small Business Bond - with a policy of real substance - some real action in this critical situation.
The priority need is clear, and is easily met. The Farm Credit Corporation now has the authority to borrow funds. It should be empowered
to borrow in very substantial quantities, and immediately, on a tax concessional basis, so that it can lend at 10% interest to the farmer.
(What "substantial quantities" could mean in dollars cannot be assessed with precision, but as an indication, SI billion would provide a
moderate loan of S100,000 to only 10,000 producers, or four to five per cent of Canadian commercial farms.) This would make a reality of the
aborted Small Business Bond policy, only carried out by the Farm Credit Corporation. whose operations and policies would be subject to
orderly development according to known standards.
These funds - in very substantial amounts - must be made available, as a first priority, for consolidation of debts of farmers in difficulty.
By "ditticutty" we do not mean the ungenerous rules of the Small Business Bond program. We mean real assistance to producers in debt to
help them in this long -drawn out period of low prices and constantly rising costs.
We ask for immediate help tor short-term priority needs. But let there be no mistake. Canadian agriculture is facing a crisis that will
become deeper, as long as very high levels of interest rates are prolonged. Canadian farmers, along with so much of the rest of society,
have concluded that such interest rates and economic health and growth cannot go together. This is especially true of agriculture as we
know it. The independent owner operator cannot under these conditions acquire a farm, or make new investment for growth. He cannot
withstand periodic adversity because of the intolerable demands high interest rates place on cash flow requirements.
The Canadian Federation of Agriculture believes that it is imperative that the Canadian government come to terms with the realities of
the situation of the industry - to understand that its very future and long-term character are at stake. The use of the land and the shape of
rural society are fundamental issues. They should not be settled - by the pressure of blind economic forces, compounded by governmental
indifference. Yours sincerely,
Glenn Flaten
President
PG. 44 THE RURAL VOICE/JULY 1982