The Rural Voice, 1983-02, Page 46Ai
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PG. 46 THE RURAL VOICE, FEBRUARY 1983
ONE MAN'S OPINION
CHEAP MONEY:
EXPENSIVE LAND
by Adrian Vos
The great push for low cost mortgage money for farmers is
on. The Ontario Federation of Agriculture (OFA), acting on
the results from province -wide hearings last year, has
developed a proposal called "agribonds". This means a
retiring farmer could invest the money,
received from the sale of his farm, in
the Farm Credit Corporation (FCC).
In return, he would get tax advan-
tages to off -set the income he would
have received from other, higher paying
investment.
This proposal, well received by sev-
eral federal cabinet ministers, could
generate considerable funds for the
F.C.C. Retiring farmers wouldn't lose,
and beginning farmers would be pro-
vided with funds to buy their first farm.
The loser would be the government (us) through lower tax
revenue. Another subsidy.
It seems the creators of the idea haven't thought this out far
enough. What will happen if there is more money available for
the same number of farms? It is not too difficult to figure that
one out. The increased bidding would raise the price of farms
and the extra FCC money would not go to the beginning
farmer but to the seller of the farm, the retiring farmer or the
speculator.
From all reports, this has happened exactly that way in
Saskatchewan. It is one of the most basic economic laws.
What is needed right now is a program like the Ontario
Farm Adjustment Assistance Program, which helps farmers in
need to place their business on a sounder footing. Here the
government sits together with the farmer and the lender
(bank) and works out a program suited to each individual
case. If the banker and government extension worker agree
some assistance, for a limited time, will put the farm back on
its economic feet, interest assistance is given. At the same
time, the farmer is obligated to learn better financial
management which is lacking on the vast majority of Canada's
farms.
To prevent future financial problems, bankers should insist
a borrower have a sound bookkeeping system in place. There
is nothing which will help farmers more than enforcing such a
condition.
There are bankers reluctant to spend a whole day with an
extension worker and a farmer, to see if the latter's business
can still be rescued. Here the mushrooming farm survival
associations can play a useful role. They can (and do) force
the banks to make an extra effort. At the same time these
militant organizations have lost support through unwise
demonstrations. They will be well advised to investigate those
farmers who call for help and see if militant help is justified.
There are cases before the courts now where farmers are
charge with fraud and deceiving their bankers. If the goal of
the survival associations is to gain time so a farmer in trouble
can be rescued, they are dong a useful service.
The established farm organizations should take note of the
fast growing support for the survival associations.
Adrian Vos is a free lance writer from Huron County who lives
near Blyth.