Loading...
Clinton News-Record, 1985-3-20, Page 72New realities for banking and agriculture have emerged from tike economically turbu- lent 1980s that are affecting the relationship. between farmers and their bankers in five important ways, according to Bank of Montreal spokesman. "We have gone through a period in which many basic business assumptions were proven wrong," Bank Vice -Chairman S. M. (Stan) Davison told an audience of farmers at the fifth' annual F irstBank Farm Profit Outlook Conference in London recently. "As we enter the last half of the 1980s.... with a good degree of stability occurring over the last year, a new set of basic business rules appear to have emerged." • One important result has been the develop- ment off a much wider range of farm banking services than have ever been available before -- fixed or floating rate operating loans, building and equipment term loans, longer term mortgages, and this year a revolutionary 40 new service account developed from sugges- tions by farmers serving on the Bank of Montreal's Agricultural Advisory Panels. The new farmer - banker realities as the Bank of Montreal sees them, said Patrick M. Moncrieff, the Bank's Senior Agriculture Manager, are high real estate rates and thus a high real cost of borrowed funds; low inflation; asset values trending to productive values; relatively low growth in demand for farm products; intense comnodity sales competition -- all leading to continuing pressure on faun .operating margins. "In titrhes off instability and uncertainty," Davison said, "the time planning horizon .of farm businesses was, of necessity, the short term. While this is still true, to some degree, because of the real cost of borrowed funds, the new realities are taking hold and we are beginning to see, with confidence, a little longer -terra. Hence, we can begin to think about planning our strategies for the remainder of the 1980s. These new realities, used as the central theme of this year's conference, have.had five major impacts on farmer - . banker relation- ships, Kouwenhoven said. The number one impact is on structure. "Agriculture is undergoing a major change in structure. There is a sorting out process going on. A smaller percentage of farms are responsible for purchasing the largest share of farm inputs 'and sale of farm commodi- ties. " One of the main purposes of new Commercial Banking Units within the Bank of Montreal, he said, is to 'have specific expertise to service the larger comhnercial farm enterprise. We have staffed these units with more experienced and senior personnel because you want professional service." A second impact is on farm financing. The farm financial issue has become the number one farm policy issue in Canada today, Kouwenhoven said. "Governments are at- tempting to sort out where the true public interest lies... We are not looking for government protection but...for guidance on the future direction of the agricultural industry. " A third impact was on credit worthiness. Because of the effect on capacity to service debt of declining asset values, low commodity prices, and high real interest rates, he said, "credit worthiness is no longer assumed, by turn to page 14a Turbulent 80s affect farm -bank relationship Permit dual labelling for chemicals Agriculture Minister John Wise has instructed Agriculture Canada officials to amend regulations to permit the voluntary dual labeling (metric and irlhperial) of agricultural chemicals, including fertilizers and pesticides. "For years, farmers and farm organiza- tions have told the federal goveniment that a metric only label on these products .00uld be misunderstood by users," Wise said. "My colleagues and I have recognized and shamed these concerns with the agricultural com- munity." "As a government, we believe that every effort should be made to ensure that errors in application due to metric only labeling are avoided. Therefore, like the Canadian Federation of Agriculture, the United Grain Growers and others, we believe that both measurement systems should be allowed for the labeling of agricultural chemicals, includ- ing fertilizers and pesticides," said Wise. The Minister said he expects the amend- ment procedure will be completed in the near future and no prosecution under the current metric only regulations will be undertaken. For Quality Service and Fair Prices Lucknow 528-3141 .Electric Heating & Electric Heat Conversions Electric Motors Sales and Service G E N E RqC °Danor Farm Ventilation Systems °Generator Sales & Service °Pole Line Construction 024 Hour Emergency Service .Free Estimates Emergency Pow r Alternators aNn 011.