The Rural Voice, 1987-01, Page 19"The Farm Survival Association
arose among farmers who felt they had
no choice in the face of almost impos-
sible odds ... and from a perception
that society was not treating them
fairly. I can understand why the frus-
tration was there. I have some diffi-
culties justifying some of the actions
that they took."
"We didn't ignore the
farm survivalists; in fact,
one of our vice-presidents
went to one of their meet-
ings — sort of like riding
into Death Valley ..."
The extremist actions were mostly
the result of "a handful of bad actors,"
says Frayne. "They were the militant
wing of it, but many of the people
that were in there were just frustrated
farmers. The area I cover includes the
Grey -Bruce area where a lot of this
started, and I knew some of these
people, and I knew their personal his-
tories, and actually I can understand
some of their points of view."
The Bank of Montreal listened to
what the farm groups had to say,
Frayne notes. "We didn't ignore the
farm survivalists; in fact, one of our
vice-presidents went to one of their
meetings — sort of like riding into
Death Valley — but he went and
presented his case."
"In many ways," he adds, "if you
think back, the govemments and banks
did act positively and do some things
to help. The small business bond
financing was sitting there, not really
being taken advantage of, and things
like OFFAP and the interest rebates —
a lot of that was a result of the lobby-
ing done by some of those groups, so
it wasn't all bad."
Farm suvival groups haven't been
the only product of the financial crisis.
There has also been a reassessment by
both bankers and farmers of how credit
should be used.
Bob Richards says that bankers
have made other adjustments in add-
ition to giving more weight to bor-
rowers' cash-flow projections and
somewhat less to the value of the
assets securing loans.
"The Bank Act says we can lend
up to 75 per cent of the value of a
property. And a few years ago if it
looked like the repayment was there
we would likely lend you that 75 per
cent. Today, the act still says we
can lend 75 per cent, but our own
guidelines say we're going to take a
long hard look, and we're probably
not going to exceed 65 per cent."
The tightening of lending guidelines
affects new loans, he adds, "but we're
not just arbitrarily calling in loans
that are already out there."
The assessment of existing Loans
has to take into account the indiv-
idual's management ability, Richards
says. "Is this guy caught up in this
because of the time he entered farm-
ing, is he suffering from industry
conditions generally, or is his prob-
lem just a reflection of his own
weak management ability?"
The are many good managers
out there, he says, but there could
be more. "The agriculture industry
generally has always been very
production -oriented — the most pigs
per sow, the highest yield per acre
— but I think along the way finan-
cial management kind of took a back
seat."
The Royal Bank is now asking
for better financial information from
its customers, and Richards says that
should benefit farmers. "I think
OMAF has recognized this need. To
apply for any of their programs you
have to present a pretty sound finan-
cial package. That has a benefit
because in some cases it may be the
first time the applicant has put that
information together."
The increased emphasis on
financial management isn't coming
from banks and government alone,
Richards says. "We've seen some
real tangible improvement in that
area among our customers."
The Ontario Farm Debt Review
Board has recently become a third
player in the traditional banker and
farmer relationship, and John Mayes
says that the Bank of Commerce has
"somewhat mixed" feelings about
that. Now that the board is in place,
the bank is committed to try to
make the system work, he says, but
adds that he questions the idea that
the board is needed as an intermedi-
ary between borrowers and creditors.
"That was something that we felt
we were doing. We had been meet-
ing with people and working with them
on a one on one basis, and inherent in
the establishment of the board is the
criticism that we hadn't been."
"We have always encouraged our
clients when they get in financial
difficulty to seek opinions from third
parties. Trying to salvage a farm that's
in financial difficulty is probably the
single biggest financial decision that
anyone will ever make, and the more
information you can get on that the
better."
But if third -party intervention is
needed, Mayes says, this new provision
for negotiated, not imposed, agreements
is the best solution.
"If the board were able to dictate
a solution, that would be akin to my
saying, "I borrowed a dollar from you
five years ago, but now I'm not able
to pay you back, and I'm going to ask
somebody else to tell you what you
can do about it." I think that has very
serious implications."
"On the other hand, when you and
I can sit down under the auspices of a
third party that can co-ordinate and assist
in an entirely voluntary process, I think
more meaningful solutions will be
developed."
"If the (debt review) board
were able to dictate a
solution, that would be
akin to my saying, I bor-
rowed a dollar from you
five years ago, but now
I'm not able to pay you
back, and I'm going to ask
somebody else to tell you
what you can do about it."
The Debt Review Board's very
existence is proof to some that Ontario
farmers are in serious trouble, that their
.future is in doubt. Mayes thinks that's
an overly pessimistic view.
"It seems to me that we're between
two extremes of the pendulum between
now and 1977 or 1978. Then there was
a great deal of optimism about the future
of agriculture. Now we're at the exact
opposite extreme. I think that some-
place in between there's a middle ground
for a more stable approach to the farm-
ing community."
1t can't be too partisan to hope he's
right.0
JANUARY 1987 17