The Rural Voice, 1986-10, Page 21!JI!!./1.llll./././!✓!ll✓I!✓ll.,/,./.,/lIIIJ!!lllll_i./✓./!!.l!!✓1.lll✓.1..././✓✓.../,/ll./✓./✓././,/lll./✓, /!./✓✓✓. /'
BRUCE FARMER PROPOSES
FCC CHANGES
by Alice Gibb
Bruce County farmer Roy
Pennington has a proposal
that he believes could not only help
financially pressed farmers but
could also put the Farm Credit
Corporation (FCC) into the black.
Pennington, who represents
Bruce County Council to the coun-
ty Federation of Agriculture and
chairs the county's Agriculture
Study Committee, is proposing
that the FCC "have the same
status as a chartered bank and be
known as the Farm Credit Cor-
poration Bank."
As a government-owned institu-
tion, the FCC bank would provide
the regular services offered by
chartered banks and an outlet
where older or retired farmers
could invest their money, perhaps
in agribonds. The FCC bank
would also continue FCC's role of
providing finances for purchases
and mortgages of farm land.
Pennington's proposal has been
forwarded to OFA president Harry
Pelissero in the hope that the OFA
will discuss the idea at the ex-
ecutive level. The banking pro-
posal, however, was originally sub-
mitted to Sonny Anderson, chair-
man of the FCC, in September of
1985. (It was also forwarded to the
federal finance and agriculture
ministers.)
Anderson's concern, says Penn-
ington, seems to be that Canada's
chartered banks would oppose the
government's moving into their
territory. But Pennington's argu-
ment is that if the FCC could reap
even a portion of the profits that
banks have made on farm lending,
then the losses the FCC has suf-
fered in long-term financing for
farmers would be offset.
"For how many years have our
local banks been saying to farmers
Roy Pennington
who were getting behind on their
operating loans, 'You go over to
Farm Credit and get a bigger mort-
gage.' And whether that mortgage
was another $50,000 or another
$100,000 or maybe even the first
mortgage they had with Farm
Credit, Farm Credit ended up giv-
ing the farmers money and now
they're (Farm Credit) left holding
the bag and the banks are off scot
free."
Pennington, who operates a
cash -crop farm between Teeswater
and Wingham, says that the FCC
bank should also take over
operating loans so that farmers
would have all their financing in
one place.
In return for one-stop banking,
Pennington says farmers would
have to allow the FCC bank to do
a regular client audit. Applicants
for mortgages or loans would have
to present a complete picture of
their net worth and convince of-
ficials of their desire to farm and
their willingness to co-operate with
bank officials. Any portion of old
loans not covered by the FCC bank
loan would be set aside for three to
five interest-free years and then
reviewed, with the possibility of a
further extension.
But the major selling point for
the proposal, Pennington believes,
is the stability of financing offered
to farm borrowers. The FCC
bank, Pennington notes, could
guarantee that the operating loan
to a farmer would be one per cent
above prime for a certain period,
while the chartered bank rate for
that same period might fluctuate.
Even if the FCC bank adjusted
mortgage and operating loan rates
every six months, there would still
be more stability for farm bor-
rowers than currently available
from chartered banks, he says.
When asked if the government
might not be reluctant to get in-
volved in the banking business,
Pennington replies that "they want
to be involved in welfare and social
services." He says if Ottawa is able
to maintain welfare payments and
unemployment insurance, then
"the government should get in-
volved in promoting a viable living
in the agriculture sector."
Pennington is hopeful that
Harry Pelissero and the OFA ex-
ecutive will be able to win more
support for his bank proposal,
since the idea has received little at-
tention from federal politicians.
After all, Pennington says, it's
time agriculture got a "fair
shake."
"And I really think that sooner
or later our provincial and our
federal members are going to have
to wake up to the fact that if
something isn't done for agricul-
ture, where is the tax base going to
come from?"❑
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OCTOBER 1986 19