HomeMy WebLinkAboutThe Wingham Advance-Times, 1985-03-20, Page 93'ibe Form Eldttirmi, Wek of Much tC 111183 - 13a
Bank sees new realities
in farm - bank relationship
t New realities for banking and agriculture
have emerged from, the economically turbu-
lent 1980s that are affecting the relationship
between fanners and their bankers in five
important ways, according to Bank of
treak spokesman.
'We have gone through a period in which
many basic business assumptions were
proven wrong," Bank ViceChainnan S. M.
(Stan) Davison told an audience of fanners at
the. fifth annual FirstBank Fhrm Refit
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 of 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 revolutic nary
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 commodity sales
competition -- all leading to continuing
pressure on farm operating margins.
"In times of 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,
S, SII.I
because of the real cast of borrowed funds,
the new realities are taking hold and we are
beginning to see, with confidence, a little
longer-term. 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 chhange 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 rnain purposes of new
Commercial Banking Units within the Bank of
Montreal, . he said, is to "have specific
expertise to service the larger commercial
fann 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
fann 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 pmtedion but... for guidance on
the future direction of the agricultural
industry."
A third impact was on .edit 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 affe0 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 imperial) of
agricultural chemicals, including fertilizers
and pesticides.
"Fbr years, fanners and farm organiza-
tions have told the federal government that a
metric only label on these products could be
misunderstood by users," Wise said. "My
colleagues and I have recognized and shared
these concerns with the agricultural com-
munity."
"As a government, we believe that every
effort should be made to ensure that errs in
application due to metric only labeling are
avoided. Therefore, like the Canadian
Flederation 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 -
rent procedure will be completed in the near
future and no prosecution under the current
metric only regulations will be undertaken.
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