moved that Bill C-25, an act to amend the Farm Credit Corporation Act and to make consequential amendments to other acts, be read the second time and referred to a committee.
Madam Speaker, I am pleased to begin debate today on Bill C-25, an act to amend the Farm Credit Corporation Act. I am proud to introduce the bill as it is important legislation that would position the Farm Credit Corporation to meet the needs of the agricultural industry today and well into the future.
I do not need to remind anyone in the House that agriculture is the backbone of most rural economies in Canada. Bill C-25 builds on the existing Farm Credit Corporation Act of 1993. It expands the depth and scope of services that the corporation is able to offer farm families and farm related businesses across rural Canada.
Through the legislation, the Farm Credit Corporation would help more farm families achieve their long term goals. The corporation would assist a greater number of agricultural enterprises in creating jobs and economic growth in rural Canada. It would have a new name, Farm Credit Canada-Financement agricole Canada, to better reflect its federal identity. FCC would be better positioned to contribute to the long term sustainability and prosperity of rural communities where farmers live and work.
The corporation has a long tradition of anticipating the needs of agriculture. Since 1959 FCC has worked with the industry to introduce services to meet its needs.
In the past few years FCC has introduced many new financial options that lead the way in meeting emerging requirements. It is estimated that up to 120,000 farmers would be retiring over the next decade, and that $50 billion in farm assets would change hands. There is a definite need for services that help farm families make the transition from one generation to the next, just as beginning farmers need help in getting a solid start.
That is why FCC introduced the agri-start loans in 1998. These loans recognize the marketplace realities young farm families face today. They provide flexible payment options to help young farms and young farmers grow their operations through the initial development phase. These options also assist existing farmers to pass the farm to the next generation.
Last year the corporation developed flexi-hog loans. These loans offer flexible payment options to help hog producers through the cyclical downturns in their industry. Earlier this year FCC introduced the enviro-loan. It enables producers to upgrade or expand their operations according to the latest environmental standards. FCC has its ear to the ground, listening to the needs of producers in the agricultural industry. It has its eye on the horizon, anticipating the industry's needs in the years to come.
Since 1993 the Farm Credit Corporation Act has served the agricultural industry in good stead for nearly a decade. However the marketplace has changed considerably in the past eight years. Producers are venturing into new crops and livestock production. They are entering into more long term contracts with suppliers and buyers. They are forming alliances with other farmers to increase their purchasing and selling power. Some producers are exploring new generation co-operatives. Others are expanding into value added manufacturing to diversify their revenue source.
The average agricultural operation requires a more complex range of financial and business services than could not have been foreseen when the act was last amended in 1993. FCC has played a leadership role in meeting these needs. The corporation is the only national financial institution totally dedicated to agriculture. Its slogan “Agriculture, it's all we do” is more than a marketing strategy. It is a statement of fact. The corporation's 900 employees are well recognized for their agricultural expertise and most of them come from farming backgrounds.
Through its network of 100 offices the FCC is able to reach producers throughout rural Canada. All these qualities enable the corporation to play an even greater leadership role in building the agricultural industry of the future.
I first met with the FCC senior executives two years ago to explore updating the 1993 act. I asked the corporation to consult with the agricultural and financial associations across the country on whether the act should be adjusted to meet emerging industry needs.
In the winter 2000, FCC staff met with more than 100 national and regional organizations to discuss proposed changes to the existing legislation. The majority of agricultural organizations were supportive of the proposals. They recognized the necessity of updating the act to meet the needs of their members and producers in general.
The major concern expressed by some farm groups was that the FCC keep its focus on family farms and primary production. Let me state without qualification that farming would continue to be the main focus and driving force of the corporation. This commitment is built right into the new legislation. Currently 94% of FCC's lending is directed to primary producers. To demonstrate FCC's ongoing commitment to producers, we have included an amendment to the act that requires farming operations to be the main focus of the corporation's activities.
In their meetings with financial industry groups, FCC representatives went to considerable lengths to demonstrate that the corporation is seeking expanding opportunities to partner, not compete, with the private sector and other government agencies. There is a definite need for increased financial options in rural Canada that could be effectively addressed through partnerships.
The corporation is actively seeking partnerships with other financial institutions and government agencies that combine its agricultural expertise and rural reach with their specialized services.
To date, the FCC has 27 partnerships across the country and plans to grow this number in the coming years.
Using the valuable feedback and suggestions gained from these consultations, the federal government has created amendments to ensure the continued relevancy of this act. The amendments were based on three guiding principles: the need to offer agricultural operators a greater range of options and financial and business services; the need to offer farm related businesses increased access to capital in support of primary producers; and the FCC's need for greater structural flexibility to offer more services through partnerships and to remain viable to serve producers for the long run and the long term.
I will briefly review the major amendments. The first amendment demonstrates the federal government's continued commitment to Canadian agriculture. We seek to change the name of Farm Credit Corporation to Farm Credit Canada. In French it will change from Société du crédit agricole to Financement agricole Canada. This change reflects the corporation's public mandate to serve rural Canada as a federal crown. Adding the word Canada to the corporation's name sends a clear and visible message that the federal government plays an active role in rural communities. The name change also supports the new federal identity guidelines.
Another key amendment allows the Farm Credit Corporation to offer business services to producers either directly or through partnerships. As I mentioned, the average producer needs access to a broad range of business management services to succeed. It could be business planning, succession planning or land management. Yes, these services currently exist in some parts of rural Canada, but the FCC can provide the network to make these services accessible throughout all rural Canada. Agricultural operators are running businesses just as complex as any urban based small business. They deserve the same access to services as their urban counterparts.
Let me use the Kaeding family from Churchbridge, Saskatchewan, to illustrate this. If the Kaedings are an example of an average farm family, it is easy to see why the need for more complex business and financing services has grown.
The Kaedings are FCC customers who, in the past decade, have diversified their grain operation to include a pedigree seed business. That seed business includes 50 varieties of grain crops plus specialized crops of grass and forage seed. They say they have stayed with the Farm Credit Corporation because of the corporation's flexibility in meeting their emerging financial needs. Through these new amendments, the FCC will have greater flexibility to keep pace with the changing demands of farm families like the Kaedings.
The new legislation clarifies the FCC's ability to offer lease financing to agricultural operators. While the act as it currently reads does not prevent the corporation from offering lease financing, the scope of these services needs to be more clearly defined. Leasing is a growing financing option for producers who want more flexibility to manage their cash flow. This especially applies to new producers starting out.
The new legislation will enable Farm Credit Corporation to offer equity financing to producers and farm related businesses. Many farming and farm related operations need access to equity as well as term financing. In fact, rural communities cannot develop local value added agricultural industries without venture and equity capital. The Farm Credit Corporation will not only be able to make direct equity investments in local agricultural enterprises, it will also be able to leverage this investment to attract other equity providers.
An important amendment to the act will allow the Farm Credit Corporation to provide financial services to farm related businesses that benefit agriculture. Currently the corporation can lend only to businesses that are farmer owned. If we step back for a moment to look at agriculture as a whole, we will see it is no longer divided into neat categories of suppliers, farmers and processors.
As the industry becomes more integrated, interdependencies grow. The farmer who has diversified from wheat, for example, into chickpeas might depend on a local processor to purchase his or her crop. Increasing investment and farm related businesses from fertilizer plants to food processors will greatly benefit producers directly not to mention contribute to the rural communities as well.
The future of primary production is linked to the growth of farm related businesses, both those owned by farmers and those owned by business people in rural communities. The FCC has provided lending services to farm related operations since the act was last amended in 1993. The corporation will continue to focus on small and medium sized operations that are directly linked to producers and contribute to local communities.
Amendments to the financial structure of the corporation will give it added flexibility to seek new partnerships and offer expanded services. The FCC will be able to create subsidiaries to enter partnerships offering new services arm's length from the existing portfolio.
The corporation will have access to a broader range of financial management instruments to fund services it provides to producers. These amendments help the corporation provide new services that meet emerging needs while protecting its long term ability to serve agriculture.
In the past four decades, the FCC has served producers and agriculture through all commodity cycles and through good times and bad. The corporation has shown great flexibility in working with producers to see them through market downturns and climactic disasters. When times get tough this commitment is especially evident. The FCC employees sit down with customers and work out solutions to address their particular situations.
In 1998 the FCC was there to help Quebec and Ontario producers affected by the ice storm. The corporation has worked with prairie producers through the downturn in cereal crops and oilseeds. In the past year the FCC has helped farmers in southern Alberta weather a severe drought. It has worked with potato growers in Prince Edward Island through the market upheaval caused by the potato wart, which we settled today. The FCC employees work with producers in any commodity group to develop flexible options to see them through.
For instance, the president of a British Columbia cranberry company recently sent me a letter and through me thanked the Farm Credit Corporation for its continuing support through the recent downturn in the cranberry sector. Through the proposed amendments the Farm Credit Corporation will help producers achieve long term success in decades to come.
I have just explained the reasons driving our pursuit for amendments to the Farm Credit Corporation Act. As well, I have outlined the key amendments and their benefit to Canadian producers in the agricultural industry. I would ask members of the House to support this important piece of legislation as it goes forward in the House.
