HomeMy WebLinkAboutClinton News-Record, 1985-3-20, Page 36oirlpa;
a Hal>lt arid.
aid knde
ibe the key to solving lmnY AIM flnamial
plrilaletris.
He said in many casesv, the legal system
alone is too rigid to deal with the massive
defaults in the agricultural sector. The legal
`system is based on a winner • take all
philosophy and this often inhibits negotiation.
Barker suggested some creative financial
0' • tectmiques such as interest holidays, reduc-
tion of interest rates, writing down accrued
interest' and in some cases writing off some
debts, as ways of solving 'problems. The
lender has a legitii ate right to be paid, but
{ the fanner also has a "legitimate right" to
stay on his farm. Balpncang those two sights
is the key to negotiations, he said.
Farmers who wish to renegotiate loans
should be prepared to give the lender more
than they receive in bankruptcy.
"Lenders are very reluctant to take a loss
and leave the farmer in possession. It really
411. stills in their craw to let this guy stay on the
land when the bank is taking a loss," he said._
Another speaker at the seminar, Lindsay
Barfoot, a manager of the Agri-Fbod Group of
Price -Waterhouse and Association of Toronto
warned farmers that due to the number of
farmers in financial difficulty there will
probably be many nervous farm lenders.
flatfoot said in the future, lenders might
have a tendancy to "err on the conservative
side where they previously erred on the
liberal side" when assessing farm loans.
He said farmers who have learned to cat.
costs will be the ones who stay in business.
Barfoot suggested that fanners could not
expect a lot of "new" help from govern-
ments; due to large government deficits.
He said farmers should see their lawyer, or
aaiuntant before making.a deal. Most farms
are large businesses and require competent
legal and accounting advice. 'But their
advice must be considered in light of your
wishes and circumstances. Don't rely blindly
on experts," he said.
Shared risk loans
Farmers who borrow from the Farm Credit
Corporation will have the option of choosing
new six year "shared risk" loans starting
April 1, federal Agricultural Minister John
Wise announced ijrecently.
Speaking at the Westem Ontario Farm
Show in London Marcia 8, Wise said the new
loan option would spread the risk of rising
and falling interest rates , between the
borrowers and the corporation.
The shared risk aspect would mean if
interest rates rose ,by two percentage points,
the borrower's rate would go up only half of
that. If rates were to go down, half of the
decease would be absorbed by the corpora-
tion and half by the borrower.
Wise said the interest rate adjustments
would be made once each year and farmers
alsowould receive the protectionof a 2.5
percentage point ceiling on interest rate
increases on their shared risk loans. Any
increases above 2.5 points would be absorbed
• by the Farm Credit Corp.
"Innovative progams such as the shared
risk program will give FCC borrowers greater
financial flexibility and protection," he said.
Demand for loans from the corporation has
been falling steadily for the past few years,
Largely because of the poor farm economy and
low commodity prices.
The corporation, which exists to give
turn to page 8
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