The Rural Voice, 1990-05, Page 44FARM DEBT REVIEW:
Is the System Working?
I
is called Bill C-117, an act
to facilitate fmancial arrange-
ments between farmers and their
creditors. Passed by the House of
Commons on June 26, 1986 following
lobbying efforts launched by farm
organizations, it's more commonly
known as the Farm Debt Review Act.
When introduced, farm debt
review was seen by many in the farm
community as a way to keep on the
land at least some of the farmers who
were overloaded by debt. Low com-
modity prices and interest rates that
hovered too long at rates higher than
by G. Glenn Creamer
manager of the Farm Debt Review
Board in Ontario. The board's man-
date, he says, is clear; it is "simply to
allow this mediation, this negotiation,
between the farmer (in fmancial dif-
ficulty) and his creditors, to come to
a voluntary arrangement"
Jobin admits the board got off to a
shaky start. By the time the players
were in place, he says, the board al-
ready had a backlog of more than 100
applications. After one year, only 15
arrangements had been signed. Jobin
says the period was difficult because
people had to be trained on the job.
"I went through nightmares," says Michel Jobin, manager of the FDRB
in Ontario. "We used to get 100 applications a month, and we had people
all over the countryside who didn't know what they were doing ..."
20 per cent were sending farmers
reeling into bankruptcy. If nothing
else, farm lobbyists said, debt review
would make the process of leaving the
farm a little more civilized.
There were a few reservations
about the review process as it was
finally set up, of course, particularly
about how good faith would be en-
sured when the debt review system
didn't provide access to the court sys-
tem if negotiation failed. And some
worried about whether farmers would
be able to hold their own against the
banks, even with the Farm Debt
Review Board (FDRB) actin as an
intermediary. But most welcomed
Bill C-117 with hope.
Almost four years later, too many
farms and farmers are still on the crit-
ical list, and questions are being asked
about the effectiveness of the Farm
Debt Review Act Just what is meant
by a "successful arrangement"? How
fair and efficient has the Farm Debt
Review Board been in handling cases?
What changes need to be made?
Michel Jobin is the general
"I went through nightmares. We
used to get 100 applications a month,
and we had people all over the coun-
tryside who didn't know what they
were doing ... They didn't understand
our purpose. They didn't understand
our role. Some were agitators, and
they were promoting aggressiveness.
You don't get anywhere that way."
Jack Wilkinson, second vice-
president of the Ontario Federation of
family on the farm, wherever possible
... the intent was to restructure the
debt and to leave the person with some
sort of viable farm operation."
"If the only reason for the Farm
Debt Review Board is to facilitate the
wind -down of a farm operation,"
Wilkinson says, "you really don't
need the Farm Debt Review Board."
After all, Wilkinson says, farmers
were negotiating with their creditors
before the board was formed, and they
have continued to negotiate indepen-
dently since.
There are two main sections of
the Farm Debt Review Act discussed
often in farming circles: Section 16
and Section 20. Section 16 is what
Wilkinson calls the "farmer's" part of
the act. It applies to farmers in finan-
cial difficulty who want assistance in
restructuring their debts. Section 20,
on the other hand, is directed at farm-
ers wanting a stay of foreclosure.
Figures supplied by Jobin show
that from the inception of the debt
review program, in the summer of
1986, to the end of February, 1990,
the Farm Debt Review Board received
a total of 13,285 applications. The
board has processed 8,667 of these,
and has come to arrangements on
6,698 of them.
"If the only reason for the Farm Debt Review Board is to facilitate the
wind -down of a farm operation," says Jack Wilkinson, "you really don't
need the Farm Debt Review Board."
Agriculture, agrees that the board got
off on the wrong foot. But Wilkinson
raises the question of whether the
intent of the Farm Debt Review Act
is adequate.
"We were lobbying very heavily
to try to get a reinstatement of the
Farmers and Creditors Arrangement
Act, which had some teeth to it," he
says. "The intent was to keep the farm
In other words, Jobin says, 80 per
cent of the cases that have been re-
viewed to date have resulted in what
is called a successful arrangement.
"That means it's satisfactory to the
farmer and his creditors," he adds.
"Our mandate, the law, says you
shall see to a signing," Jobin says.
"When that arrangement is signed, it
becomes a binding contract between
40 THE RURAL VOiCE