Bill C-25 (Historical)

An Act to amend the Farm Credit Corporation Act and to make consequential amendments to other Acts

Message From The Senate

[The Deputy Speaker]

I have the honour to inform the House that when the House went up to the Senate chamber the Governor General was pleased to give, in Her Majesty's name, the royal assent to the following bills:

Bill C-12, an act to amend the Judges Act and to amend another act in consequence—Chapter No. 7.

Bill S-24, an act to implement an agreement between the Mohawks of Kanesatake and Her Majesty in right of Canada respecting governance of certain lands by the Mohawks of Kanesatake and to amend an act in consequence—Chapter No. 8.

Bill C-8, an act to establish the Financial Consumer Agency of Canada and to amend certain acts in relation to financial institutions—Chapter No. 9.

Bill S-17, an act to amend the Patent Act—Chapter No. 10.

Bill C-17, an act to amend the Budget Implementation Act, 1997 and the Financial Administration Act—Chapter No. 11.

Bill S-16, an act to amend the Proceeds of Crime (Money Laundering) Act—Chapter No. 12.

Bill S-3, an act to amend the Motor Vehicle Transport Act, 1987 and to make consequential amendments to other acts—Chapter No. 13.

Bill S-11, an act to amend the Canada Business Corporations Act and the Canada Cooperatives Act and to amend other acts in consequence—Chapter No. 14.

Bill C-13, an act to amend the Excise Tax Act—Chapter No. 15.

Bill C-26, an act to amend the Customs Act, the Customs Tariff, the Excise Act, the Excise Tax Act and the Income Tax Act in respect of tobacco—Chapter No. 16.

Bill C-22, an act to amend the Income Tax Act, the Income Tax Application Rules, certain acts related to the Income Tax Act, the Canada Pension Plan, the Customs Act, the Excise Tax Act, the Modernization of Benefits and Obligations Act and another act related to the Excise Tax Act—Chapter No. 17.

Bill C-3, an act to amend the Eldorado Nuclear Limited Reorganization and Divestiture Act and the Petro-Canada Public Participation Act—Chapter No. 18.

Bill C-18, an act to amend the Federal-Provincial Fiscal Arrangements Act—Chapter No. 19.

Bill C-28, an act to amend the Parliament of Canada Act, the Members of Parliament Retiring Allowances Act and the Salaries Act—Chapter No. 20.

Bill C-9, an act to amend the Canada Elections Act and the Electoral Boundaries Readjustment Act—Chapter No. 21.

Bill C-25, an act to amend the Farm Credit Corporation Act and to make consequential amendments to other acts—Chapter No. 22.

Bill C-4, an act to establish a foundation to fund sustainable development technology—Chapter No. 23.

Bill C-29, an act for granting to Her Majesty certain sums of money for the public service of Canada for the financial year ending March 31, 2002—Chapter No. 24.

Bill S-25, an act to amend the Act of Incorporation of the Conference of Mennonites in Canada.

Bill S-27, an act to authorize The Imperial Life Assurance Company of Canada to apply to be continued as a company under the laws of the Province of Quebec.

Bill S-28, an act to authorize Certas Direct Insurance Company to apply to be continued as a company under the laws of the Province of Quebec.

Pursuant to order made on Wednesday, June 13, the House stands adjourned until Monday, September 17, at 11 a.m. pursuant to Standing Orders 28 and 24.

(The House adjourned at 5.26 p.m.)

Farm Credit Corporation Act

[The Acting Speaker (Ms. Bakopanos)]

It being 6.30 p.m. the House will now proceed to the taking of the deferred recorded division on the motion at third reading stage of Bill C-25.

Call in the members.

(The House divided on the motion, which was agreed to on the following division:)

Business Of The House

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, I have been asked by some members to clarify the business statement, given the time of year, and perhaps I could take a moment to give an updated business statement, particularly for the benefit of all House leaders.

Assuming that the debate on Bill C-25 is completed at third reading and Bill C-24 is completed at report stage later today, the business for Monday would be as follows: Bill S-11, respecting business corporations; Bill S-3, respecting motor vehicles; Bill S-16, respecting money laundering. I understand those three bills are perhaps briefer than others. We would follow this with the third reading stage of Bill C-24, regarding organized crime, which I know is of considerable interest to many members. If any time is left it would be taken up on Bill C-11, respecting immigration, and Bill C-6, respecting bulk water.

On Tuesday, of course, it will be a supply day. It is my intention at the present time to call any unfinished business for Wednesday and the debate on the modernization committee report.

Farm Credit Corporation Act

[Gerald Keddy, Progressive Conservative, South Shore, NS]

Madam Speaker, it is a pleasure to rise in the House to speak to third reading of Bill C-25 and to represent our PC agricultural critic, the member for Brandon—Souris.

I talked to the member and he wanted to go through a chronology of events on how it evolved in Canadian history from 1927 to the present date. I think there were five or six pages, which I will leave out of my speech today. However, a brief chronology is certainly in line.

The FCC, Farm Credit Corporation, was created on October 5, 1959, by the Diefenbaker Conservative government when the Farm Credit Act was proclaimed into law. It provided a consistent source of lending services that farmers could rely on through all the economic cycles, the ups and downs of the economic cycles. At the time the corporation was mandated to provide one product at one rate. First, it was mortgages to farmers to a maximum loan of $20,000.

During the first 34 years the Farm Credit Corporation and the Farm Credit Act went through many evolutions to keep step with the agriculture industry. In 1968 farming corporations became eligible for farm credit loans and loan limits increased to $150,000 in 1975. The 1982 amendments to the act led to the introduction of more loan product and the FCC made its debut on capital markets.

In 1993 the Farm Credit Act was replaced with the Farm Credit Corporation Act, which expanded the mandate of the FCC to better respond to the needs of the agriculture sector. Farm Credit Corporation could now offer producers financing to purchase or improve farmland and buildings, buy personal property for farming purposes and consolidate debts. It enabled the corporation to support value added production by providing financing for diversified enterprises on and off the farm.

This act helped bring the FCC in sync with the changing marketplace. The Farm Credit Corporation's loan portfolio has grown since those days from $3.4 billion in 1993 when the act was introduced to $6 billion today.

Today this crown corporation services 44,000 customers, has 900 employees and 100 offices across Canada.

It is important to understand that little chronology of events because what that tells us is the Farm Credit Corporation, from its introduction in 1959 by the Diefenbaker government, recognizes the needs and wants of farmers, and the agriculture community has responded and changed its situation, its portfolios and the services that it offers to accommodate changing times.

From 1984 to 1993 specifically, the Progressive Conservative government of the day improved the way the Farm Credit Corporation was managed. We brought in the Farm Credit Corporation equity building plan in 1990 to allow farmers to extend their leases and buyback land once they were on firmer financial ground. We moved the head office of Farm Credit Corporation to Regina, so it could be closer to those who used it the most. We passed a bill to expand the role of the Farm Credit Corporation allowing it to make loans to farmers who wanted to diversify their operations.

All these things were asked for by the agriculture community, and the Conservative government of the day responded to the wishes of the community.

There are a few major elements of Bill C-25. One, it would change the name to Farm Credit Canada. The mandate of the FCC would be expanded from financial services to farming operations and businesses related to farming to also include business services and products to such enterprises.

Farm Credit Corporation would have the authority to provide loans to businesses relating to farming in both cases where the business was majority owned by farmers and when it was not, quite significantly changing the mandate of the Farm Credit Corporation.

There is specific provision in the bill to emphasize the focus of the Farm Credit Corporation activities on farming operations including family farms. The FCC would be given authority to incorporate, amalgamate and dissolve subsidiaries. It would also provide lease financing for assets used or to be used in a farming operation or a business related to farming.

The Farm Credit Corporation would be given the authority to acquire and dispose of equity interests in farming operations or in businesses related to farming. The president of the FCC would be designated as its CEO and provision would be made for the appointment of an acting president and an acting chairperson when necessary.

The bill does not come to the House without some criticisms and it is only fair to mention some of those criticisms here today.

First, the name change is unnecessary and costly. It is certainly our belief that the minister is looking for a legacy for years of failed federal leadership in supporting agriculture from this government.

The bill has the potential to unnecessarily compete directly with credit unions and banks. We are not sure that will happen but the potential is there. The purpose of the FCC is to provide lending to farmers specifically, not to equipment dealers, wheat pools, for example the Saskatchewan Wheat Pool or any other wheat pool.

Although the bill expands lending powers of the Farm Credit Corporation, farmers do not need more debt at the present time. While the federal budgets for agriculture have been cut since 1993 by 65%, the total farm debt in Canada has increased by 44% since 1994. Statistics Canada and Revenue Canada statistics in 1999 report that the average farm debt in the country is $135,000.

[Jay Hill, Canadian Alliance, Prince George—Peace River, BC]

Madam Speaker, it is a pleasure for me to rise and pose a question to my hon. NDP colleague from Palliser.

I listened very carefully to the speeches of all hon. members. I was a full time farmer for about 20 years on a family farm which eventually grew, through good management and a lot of hard work on the part of my family and myself, to the size of 3,000 acres in the Peace River country of British Columbia. In fact, my brother still farms the farm.

Having that background, one of the things that concerns me with Bill C-25 is what I see as a return to equity financing. Farms across Canada, particularly in western Canada, got into a lot of trouble back in the eighties when I was actively farming. One big problem was rather than base financing on cash flow, in other words whether the farmer could actually service the debt that he or she was carrying, the Farm Credit Corporation at that time and banks pushed financing to the farmers based on an inflated value for their land. When land values plummeted, farmers could not maintain their loans and the land was eventually repossessed by the lending institutions, including the Farm Credit Corporation, which ended up owning vast amounts of land in western Canada.

If we return to equity financing, what concerns me is we could see a similar situation develop in the future. The reality is the value of the land is of no consequence to a farmer if he stays in the business of farming. It is only what the land can produce and the money that can be turned over in order to service the farmer's debt on a yearly basis.

Is that concern echoed by the NDP and by the member for Palliser? I know he has been the agricultural critic for his party for quite some time and has a lot of background in this industry. It certainly concerns me when I hear these things.

[Dick Proctor, NDP, Palliser, SK]

Madam Speaker, I am rising today to speak to third reading of Bill C-25, an act to amend the Farm Credit Corporation Act. I intend to be brief because we dealt with this at report stage yesterday. I made an intervention at that time and I have no intention of repeating myself.

The major provisions of the bill would allow the Farm Credit Corporation, soon to be called farm credit Canada, to lend money to farm related businesses not owned by farmers, in other words by agribusiness, and extend equity financing to producers and farm related businesses.

The Canadian Federation of Agriculture, as I mentioned yesterday, supported the bill in committee. I failed to mention at that time that the Canadian Cattlemen's Association also supported the bill. Both groups indicated that more financing and more equity financing was required and, in particular, the Canadian Federation of Agriculture was confident that the primary producers would remain the primary focus for farm credit Canada.

Credit Union Central of Canada was not opposed to the bill so long as it complemented its work in the community. We endeavoured to have an amendment added to the bill to ensure that this kind of complementary activity worked. We were not successful but it was not for lack of effort.

In my legislative report, I said that the only farm group opposed to the bill was the National Farmers Union. The Canadian Bankers Association was also opposed. It indicated that a broader mandate would allow farm credit Canada to compete unfairly with private lenders.

We heard yesterday, and just now from Bloc Quebecois representatives, that the UPA in Quebec, which represents Quebec farmers, have said that it has serious reservations about the bill. It is unfortunate that the UPA did not come before the Standing Committee on Agriculture and Agri-Food when we had the debate so that it could have informed the committee of its reservations.

At least one group from Quebec was present, a group that purported to deal with a number of co-operatives in that province. Overall it was supportive of the change in the mandate of Farm Credit Canada.

We heard this morning from both the Canadian Alliance and the Bloc Quebecois in committee. The objections to the bill were based on two major issues: first, to what extent a business has to be involved in farming to be considered a business related to farming and, second, with the changes to the mandate of Farm Credit Canada, how much of the corporations lending activities may be transferred from the primary producer to agribusiness.

In 1995 the FCC board of directors set the maximum loan size at $20 million. We were advised that less than 2% of the current loans in the portfolio of the corporation exceed $1 million.

Currently primary producers are about 94% of the FCC's overall clientele. With the proposed changes FCC president, John Ryan, anticipates that this would change to about 80%. There would be a change over the next five years as it grows and moves out into this emerging field. Some 20% of its lending would be to farm related enterprises.

I listened with some care to points that were made this morning by my colleague on the agriculture committee from the Canadian Alliance as well as by the member from the Bloc Quebecois. The Alliance member was concerned that the Farm Credit Corporation was intruding into the marketplace. Whereas I believe in many parts of rural Canada there is not an explosion of choice when it comes to lending institutions. It is just the reverse. There is less and less choice.

For example, in the province of Saskatchewan a number of small banks have recently gone out of business. In most cases the local credit union has taken over those operations. It is not that there is too much choice among lending institutions. It is that there is not enough choice. That was recognized by two Saskatchewan members who sit in the Canadian Alliance who I noted voted against their party's recommendation on the bill yesterday at third reading.

There is no doubt the primary focus will continue to remain on primary producers. There are times when Farm Credit Canada will probably have more land than it would want to hold on to, depending on the ups and downs and the cyclical nature of the agricultural industry. We saw no evidence that it is interested in getting into the landholding business in any serious way.

The Bloc Quebecois, which incidentally voted in favour of it at second reading but appears to have changed its mind, indicates that the gates are being opened too wide. However there is an ongoing revolution in agriculture across the country. We are trying to get more value added on the prairies and elsewhere. In order to do that we will have to take some initiative, break some new ground, get out there and encourage value added. Farm Credit Canada is one of the tools in the kit that we could use.

The New Democratic Party supports the changes and will be voting in favour of the bill at third reading.

[Howard Hilstrom, Canadian Alliance, Selkirk—Interlake, MB]

Mr. Speaker, in essence what Bill C-25 would do is expand the mandate of the Farm Credit Corporation. We in the Canadian Alliance, and I as a farmer from Manitoba, support the FCC. Certainly it is a vehicle that the federal government has used over the years to implement federal government policy where the FCC is able to provide a service that is not being provided by the private sector.

We in the Canadian Alliance are still concerned that this expansion will take away from and provide unfair competition to lending institutions like the credit unions as well as farmers, the primary producers, who now have to compete not only with each other in the immediate farming sector, but also with those beyond the primary producer level.

We all know that when lending institutions, including the Farm Credit Corporation, look at who they lend money to they look at the cashflow of the borrower. As it is now with the farm income situation in Canada in many sectors and in many commodities, it may well turn out that the cashflow is insufficient in farmers' primary production, and the money will end up flowing from the Farm Credit Corporation to the agribusinesses as opposed to the farmers. Then where will the farmers get credit?

By extending FCC's lending abilities beyond primary production, the bill would put FCC into direct competition with private lending institutions and would overlap with other government institutions such as the Business Development Bank.

The federal government has various vehicles that are necessary to deliver credit to value added businesses and industrial complexes. However if farmers do not hold primary ownership, the Farm Credit Corporation to a large extent will turn into another Business Development Bank of Canada.

We in the official opposition attempted to correct the problems through amendments to the legislation both at the committee level and during report stage. For example, we brought forward an amendment which would have limited lending to businesses not directly related to primary production.

The amendment, defeated by the government at committee, would have addressed one of our primary concerns; that FCC would shift its focus away from primary production to non-farm businesses. The amendment would have ensured that the needs of farmers do not become secondary to business lending by FCC.

FCC has stated that it will continue to focus on primary producers. That is fine and dandy but it is just an intention. We tried to have the legislation reflect and put on parameters and outside limits as to where FCC could go with its lending. Right now it is virtually unlimited. The legislation did not define who primary producers were. We tried to define that with our amendment but it was defeated.

Farm Credit Corporation has stated that 80% of its internal goal will go to primary producers. It should therefore not have objected to putting the limit into legislation. Why would it not agree to put it in legislation? It obviously wants to ensure it will be totally unhindered if it decides to move away from the primary producer and move its primary lending to agribusiness beyond the farm gate.

We also brought forward an amendment that would have limited FCC's ability to provide lease financing to primary producers only. The amendment would have helped ensure that the focus of FCC remained on primary producers. It would also have limited the government's ability to directly undercut private financial institutions in the lucrative lease market.

Here we get into the issue of unfair competition by a government agency which has all the advantages because it is insulated to a large degree from market forces. FCC has unrestricted ability to undercut private financial institutions. Under the World Trade Organization, this type of unfair activity breaches trade rules and there are mechanisms by which it can be rectified. Internally in Canada I do not know that there is anything that can control government misuse of Farm Credit Corporation's abilities.

The official opposition also brought forward an amendment that would have limited FCC's ability to provide equity financing only to businesses whose majority owners were primary producers. The amendment would have helped ensure that the primary focus of FCC remained on farming operations.

It is disturbing that every attempt to guarantee through law that FCC remain focused on farmers has been rejected by the corporation and the government.

Some have expressed concern that farmers may pay higher interest rates to cover the increased risk associated with equity financing. Our amendment limiting equity financing only to businesses owned by farmers would have reduced that risk.

Others in the business world have expressed concern that the changes to the Farm Credit Corporation would allow the government to use FCC to bail out large, even multinational, agriculture businesses. Here again there is nothing to restrict the FCC from taking that kind of action.

We will have a potential return to the situation of the early 1990s when the taxpayer of Canada had to put close to $900 million into the Farm Credit Corporation to get it back on its feet. That kind of exposure without limits only serves to increase the exposure of the Canadian taxpayer who is already heavily overtaxed by the government and always on the hook for its misuse and waste of money.

Our amendment would have allowed FCC to help develop farmer driven, value added processing but would have limited its ability to lend to large agribusinesses such as grain companies.

The Farm Credit Corporation has repeatedly stated that its focus will be on small and medium sized businesses that directly help improve the financial outlook for farmers. It therefore should have had no objection to our amendment. However, the defeat of our attempts to put this stated goal into law brings into question the government's commitment to keeping FCC's lending focused on small and medium sized businesses and it gives farmers another reason for concern.

The official opposition made another attempt to keep FCC focused on farmers by bringing forward an amendment to Bill C-25 which would have limited the size of loans FCC could provide to businesses not owned by farmers.

Again, if the FCC is committed to primarily lending to farmers why would it object to the amendment? Why would the government object to the amendment if it had no intention of changing the focus of the Farm Credit Corporation without coming back to parliament?

We also brought forward two amendments at report stage that would have ensured that the Farm Credit Corporation complemented the services already provided by private financial institutions and crown corporations. Credit unions have testified before the agriculture committee that the Farm Credit Corporation has already undertaken predatory pricing actions. An example was cited from the Niagara region of Ontario.

One credit union told the committee how FCC deliberately lowered the interest rate to farmers after it learned that the rate provided by the credit union was better than the government rate. The credit union people came before our committee and their testimony is in the committee minutes. It is factual. They said it. They were not being dishonest with us. They were reporting the facts as they saw them in the business world.

This might have helped one or two farmers at the time, but what happens after the government forces credit unions out of business? Maybe in the Niagara region there is not much concern about the issue but I can tell hon. members that in many small towns in the maritimes and on the prairies it is very tenuous as to whether a town can keep a credit union or a big bank because the business volume is not there to keep them going.

The Farm Credit Corporation is expanding and taking predatory action that could cause small towns to lose their banks or credit unions. That would be devastating to many towns and communities.

The original wording of Bill C-25 would have formalized the Farm Credit Corporation's ability to own and lease land. The Farm Credit Corporation has stated that this is not the intent of the amendment. It claims that the leasing provisions are for equipment but this was not made clear in the legislation.

We brought forward amendments at the committee and report stages of the bill that would have corrected the problem. It is not appropriate for the federal government to be an owner of Canadian farmland. Allowing the Farm Credit Corporation to permanently hold and lease land could result in Canadian government holdings influencing the market value of farmland.

Allowing FCC to permanently hold and lease land would also have provided the corporation an incentive not to pursue every possible means to allow farmers experiencing financial difficulty to stay on the land. In short, the bill could provide FCC an incentive to prematurely foreclose on Canadian farmland.

Even under the current legislation, the FCC has significant land holding ability. In the year 2000, the FCC owned over 360,000 acres. Ninety-five per cent of that land was in Saskatchewan, the province hardest hit by the farm income crisis.

I am pleased that the government has agreed to the amendment to restrict the amount of time the Farm Credit Corporation can hold on to land acquired as a result of foreclosures and other means. Under the amendment, such land would be disposed of within five years of acquisition.

If the farming community and everyone else could rely on the good intentions of government, we would probably not have problems with a lot of the bills but governments over the years have often demonstrated changes of attitude to the good intentions they have brought out in legislation and promised in elections. That is why legislation must be framed and drafted so that it is clear what the government intends to do, in this case with the extension of credit primarily in the area of agriculture and agribusiness.

It is strange that the corporation and the government did not agree to defining primary producer and setting limits to ensure that the focus remains on the primary producer. That is what we are asking for in the bill. We did not get it, and that is why we are opposing the bill. I guess in the end we must rely on the good graces and good conduct of the federal government and hope it does not misuse the lending authority of the Farm Credit Corporation.

[Larry McCormick, Liberal, Parliamentary Secretary to Minister of Agriculture and Agri-Food]

Mr. Speaker, I am pleased to begin third reading debate today with regard to Bill C-25, which amends the Farm Credit Corporation Act of 1993. These amendments would enable Farm Credit Corporation to continue its tradition of anticipating the changing needs of agriculture with innovative products and services. The main focus of the FCC remains the same: to save and work with Canadian farm families.

Canadian farmers are well known for their resourcefulness, flexibility and determination to succeed in the long term. They need a financial institution that shows the same flexibility and commitment to change with their evolving needs.

For 41 years Farm Credit Corporation has been the national financial institution that has consistently identified emerging needs, specifically, to work with and save Canadian family farms and farm families as well as to introduce needed services to address the gaps wherever they are in agriculture.

These new amendments would allow FCC to continue this tradition. The federal government has created these amendments to ensure the continued relevancy of the act. It is very relevant to all of these family farms. After review by the standing committee, the amendments remain unchanged. I will briefly review the major amendments.

The first amendment would change the name of Farm Credit Corporation to farm credit Canada. In French it would change from Société du crédit agricole to Financement agricole Canada. This change reflects the corporation's mandate to serve rural Canada as a federal crown. Adding the word Canada to the corporation's name also demonstrates the federal government's ongoing commitment to rural Canadians.

Another key amendment would allow FCC to offer business services to producers either directly or through partnerships. Producers would have access to the broad range of business services they need to succeed in a competitive environment. The new legislation would enable FCC 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.

An important amendment to the act would allow FCC to provide financial services to farm related businesses that benefit agriculture. Currently the corporation can lend only to businesses that are majority farmer owned. By extending services to more farm related businesses, FCC would help rural economies grow and would create jobs in rural communities. These are the key amendments directly impacting producers and farm related business.

Before beginning the amendments process, I asked FCC to consult the industry it serves, and I know the minister worked with it too. It is amazing, but the corporation really did its work. It met with more than 100 agricultural and financial industry groups last year to get their input. It met with more than 400 people to talk about what the bill would deliver to Canadian farm and farm families.

In general, the agricultural groups consulted were very supportive of the proposed changes. However, some producer organizations expressed the concern that FCC should continue to concentrate on serving the needs of producers. As a result, we created an amendment specifically to address this concern. The amendment states that the primary producers would continue to be the main focus of FCC's activities. Again, we consulted with producer groups in developing this amendment.

The corporation has a long tradition of consulting the agricultural industry to identify the needs. When the Canadian Federation of Agriculture told FCC that beginning farmers need more financial options, FCC listened. In 1998 it introduced agri-start loans to help young farm families build successful farming operations. The lending volume in the past few years tells us that agri-start addresses a real and compelling need. Since it was first introduced agri-start has generated almost 1,300 loans at a value of $134 million.

In 1999, a hog producer near Brandon, Manitoba came to FCC with an idea and FCC listened. Why not offer a lending product that allows hog producers flexible payment options so they can make it through the price downturns in the industry that exist today? To address this identified need, FCC designed the flexi-hog loan last spring. Since then, lending for this loan has amounted to $20 million.

In the year 2000, many Quebec producers signed up for a provincial subsidy program to help them adapt their waste management facilities to meet current environmental standards. FCC created the enviro-loan, which enables producers to make the upgrades and pay off the loan when they receive the subsidy at the end of the project. The enviro-loan is now available across Canada.

At FCC innovation is not confined to products and services. FCC is at the forefront of a growing movement in agriculture to enter partnerships to give customers more comprehensive solutions.

In the past several years FCC has built a network of 27 partners to offer more comprehensive financial packages to producers and to farm related businesses. FCC works with agriculture based businesses including input suppliers, livestock brokers and a national network of equipment dealers. FCC partners with public sector financial institutions such as the Business Development Bank of Canada and the Alberta Financial Services Corporation. The corporation also works with private sector institutions such as credit unions and is very successful with this across the country.

In March FCC announced an innovative partnership with private and public sector organizations to help farmers with life cycle planning. AgriSuccess is a joint initiative that offers seminars and online information to help producers to address long term planning issues. The initiative increases access to business planning services throughout rural Canada.

The amendments we are discussing today would position FCC to continue in its role as a catalyst and innovator. Through FCC, producers and farm related businesses would be able to access the range of services they require no matter where they live in rural Canada.

FCC recognizes that the future of farming is linked to the growth of the value added sector in agriculture. This new legislation would position FCC to support the future growth of this sector.

The spirit of innovation and entrepreneurship is alive and well in agriculture today. What the industry requires is a financial institution that understands the needs of agriculture and acts as a partner to support future growth and success. Certainly, as one of the farmers here in this Chamber is saying, part of this success is due to the people who work for FCC in the more than 100 offices across the country. These people most often have farm related backgrounds and are very close to their communities.

FCC has served that purpose for 41 years. These amendments would help ensure that FCC continues to contribute relevant solutions to agriculture for many years to come.

[Robert Thibault, Liberal, for the Minister of Agriculture and Agri-Food]

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 third time and passed.

[The Speaker]

The House will now proceed to the taking of the deferred recorded division on the motion for concurrence at the report stage of Bill C-25.

Business Of The House

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon, pursuant to an order made earlier, the House will conclude third reading of Bill C-28, the Parliament of Canada Act amendments. Tomorrow we will deal with third reading of Bill C-25, the Farm Credit Corporation amendments, as well as report stage of Bill C-24 with respect to organized crime. Those are the only bills I expect to deal with tomorrow.

On Monday we will then consider third reading of Bill C-24 regarding organized crime, then Bill S-16, the money laundering bill, followed by Bill C-11, the Immigration Act amendments, Bill S-11 respecting business corporations, Bill S-3 respecting motor vehicles and Bill C-6 respecting bulk water.

On Tuesday we shall deal with an allotted day for the consideration of main estimates at the end of the day. There has been consultations among political parties, and I would hope to take a few minutes on Tuesday to debate and hopefully receive the consent of everyone for a motion regarding Mr. Mandela.

Later next week, we will deal with any bills listed that are not yet complete, as well as the report of the modernization committee. I will consult my colleagues, the House leaders of official parties regarding business for Wednesday and the days beyond, should there be such dates. This ends my report.

Farm Credit Corporation Act

[Carol Skelton, Canadian Alliance, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, our concerns on this subject were increased during the clause by clause debate in committee. The chairman of the FCC indicated that FCC could consider taking possession of land in the government's yet to be announced plans to facilitate the intergenerational transfer of farmland. As a mother who has lost two sons from the farm, I am very concerned about this.

The FCC and the government should have no objections to the motion because the FCC has stated, in testimony before the committee, that it is not FCC's intention to become a landholder. The FCC has also testified that it works to ensure that land is sold at prevailing market prices and that FCC does not influence land values. I know in my own riding that it does.

Motion No. 2 reads:

That Bill C-25, in Clause 5, be amended by replacing lines 32 and 33 on page 2 with the following:

“that complement but do not directly compete with those available from the private sector, or that complement but do not duplicate those provided by other publicly owned institutions;”

The motion is designed to ensure that the federal government does not actively compete with private financial institutions, such as credit unions and the banks.

During the committee review of Bill C-25, representatives of Canada's credit unions indicated that the Farm Credit Corporation currently actively competes for business. I know it does in my own riding. One witness testified that his credit union lost a customer because the FCC dropped its loan rate after learning of the rate offered by the credit union. The expansion of the FCC's powers would make this active competitive behaviour much more likely.

We are also concerned that the expanded powers of the FCC would simply duplicate the existing authority of other public financial institutions ,such as the Business Development Bank which, as we all know, does not have a good track record. The motion would ensure that the FCC's new powers would not duplicate the authority and problems of the BDC.

Motion No. 1 reads:

That Bill C-25, in Clause 5, be amended by replacing lines 12 to 18 on page 2, with the following:

“services and products to farming operations and to those small and medium-sized businesses in rural Canada that are businesses related to farming. The primary focus of the activities of the Corporation shall be on farming operations.”

This motion is designed to address one of our most serious concerns with Bill C-25; that the corporation could lose its focus on providing services to farmers because of its involvement in off-farm businesses.

According to the current wording of the bill, the FCC could loan money to agriculture businesses, no matter how large or lucrative. For example, the Farm Credit Corporation could give a loan to the Saskatchewan Wheat Pool if the government concluded that this was the direction in which they wanted to go. The motion would ensure that any services offered to non-farm operations would only be given to small and medium sized businesses and not large corporations.

The government and the FCC should not object to the motion because they have repeatedly stated that they have no interest in providing financial services to large corporations.

I ask members sitting opposite to look at our motions and, on behalf of the rural residents in my riding of Saskatoon—Rosetown—Biggar, to respect our opinion as farm people from western Canada.

[Carol Skelton, Canadian Alliance, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, it is indeed a pleasure to speak on the amendments put forward by the Canadian Alliance to Bill C-25, an act to amend the Farm Credit Corporation Act.

Motion No. 3 reads:

That Bill C-25, in Clause 5, be amended by adding after line 44 on page 2 the following:

“(f.4.1.) dispose of farmland acquired by it, provided that the disposal is at fair market value and is done as quickly as possible, and in any case no longer than five years, after the acquisition.”

The Canadian Alliance is concerned that Bill C-25 would allow the Farm Credit Corporation to become a significant landholder. We are seeing that especially in the province of Saskatchewan. The amendment is designed to ensure that the federal government does not become a major holder of Canadian farmland and does not unduly influence the market price of land.

I have spoken to many farmers who have told me that the Farm Credit Corporation has had an effect on farmland prices. The hon. parliamentary secretary can come to Saskatchewan and visit my riding to see the truth.

[Larry McCormick, Liberal, Parliamentary Secretary to Minister of Agriculture and Agri-Food]

Mr. Speaker, thank you very much for the opportunity to speak to the bill. Farm Credit Corporation has been very successful across the country and it certainly looks forward to working even more for the benefit of the farmers and the primary producers.

I will take a moment to note that I was very glad to hear that at committee in the past week or two one of my colleagues from the Alliance Party put the fact on the table that the Standing Committee on Agriculture and Agri-Food still has the reputation of getting along better for all the right reasons than any other committee, in support of farmers across the country. I trust that we can work together in future in the same way.

I will speak to Motion No. 1. Farm Credit Corporation's proposed amendment in Bill C-25 is consistent with the current legislation, with the exception of the following add-on:

The primary focus of the activities of the Corporation shall be on farming operations including family farms.

Farm Credit Corporation held consultations on the future role of FCC with over 100 regional and national groups across the country, more than 100 farm and agribusiness organizations and all major financial organizations in each and every province, as well as institutions and provincial governments. Over 400 individuals participated in the consultation meetings across Canada.

Yes, concerns were expressed that Farm Credit Corporation's focus could be diverted from the primary producer. However the Canadian Federation of Agriculture appeared before the House of Commons standing committee in regard to the bill. The CFA represents some 220,000 Canadian family farms, many in your riding, Mr. Speaker. The CFA asked that FCC maintain the focus on the primary producer. That is what the bill would do. The CFA's exact words were:

We believe that primary producers must always have the first priority in accessing FCC financing.

To ensure that the corporation continues to meet the needs of primary producers, FCC formulated the wording of the clause in collaboration with the CFA's board of directors. The wording of the bill expresses the concerns of the CFA word for word. Let me repeat that it is word for word. The wording is:

The primary focus of activities of the Corporation shall be on farming operations including family farms.

FCC recognizes the necessity of serving farm related businesses to benefit producers and rural communities. The corporation's number one focus will continue to be primary production. Currently more than 90% of FCC's financing is directed to farming operations.

According to Statistics Canada, 98% of farms are family owned and operated. This means that the great majority of FCC services is directed to family farms and to farm families. For this reason it is very important that the bill go forward with the wording as proposed by the FCC.

Because of the importance of the family farm for the social and economic fabric of rural Canada, the words family farm were specified in the legislation. The government supports the new legislation as an important contribution to sustainable growth in rural Canada and recommends that Bill C-25 not be changed to remove the words family farms from the legislation.

No one definition exists in common usage that clearly defines the levels of business enterprise. The continued growth of the value added industry means that the definition of small and medium sized enterprises will continue to evolve. FCC's role is to provide an environment for the growth of the agricultural industry to occur by continuing to meet the needs of the industry.

FCC's lending limit established by the board of directors is currently $20 million and has been since 1995. Limits such as these clearly indicate that all FCC loans will be to small and medium sized businesses related to agriculture. It should also be noted that FCC's average mortgage loan size is $106,704 to primary producers and $498,909 to agribusiness clients. The average non-mortgage loan size for personal property loans is $31,000 to primary producers and $42,000 to alliance clients. There are currently no plans to increase this lending limit. In fact our emphasis has shifted over the past few years from doing full proposals on our own to joint financing with other institutions. Therefore, the government supports the legislation.

With regard to Motion No. 2, as introduced by the Canadian Alliance, it is too limiting. I was glad to hear that my colleague from Palliser agreed. More than 100 organizations across Canada also agreed. We cannot agree to Motion No. 2 because farming operations are growing more complex and the marketplace is more competitive. In order to achieve long term success, producers and farm related businesses need access to a broader range of business management services.

Services can be significantly different by geography, making it difficult to serve those who need a particular service not available from other institutions in any given area. As a national organization, the FCC can dedicate its efforts to delivering services where services are required.

During the consultation process, it was identified that there was a gap in business services in rural Canada. Certainly we all agree with that. The Canadian Young Farmers Forum enthusiastically endorsed FCC complimentary services on a fee basis, while several groups noted that the FCC does not provide services already being offered in the private sector. As a result of this input, Bill C-25 states that the FCC's intent is to provide business services and products that complement those available from the public and the private sectors.

The business management services that the FCC proposes would complement existing services, not compete directly with other providers. The FCC would work in partnership with existing service providers to increase access to business services through its network of 100 offices.

One of the strengths of the FCC is that most of the people who work with the farmers and the producers have a farming or a farm related background and do a great job across the country. The FCC only intends to offer business management services where a clear need is identified.

The FCC would work in partnership with public and private sector organizations, wherever possible, to enhance the product and service offerings available to rural Canada. The FCC has a memorandum of understanding with BDC and has 27 partnership agreements with public and private sector organizations.

Over time, financing needs of producers and farm related businesses change quickly. Private institutions respond to providing services based on the profitability of products which can change based on the number of clients in a particular area and the level of competition.

The government will not support Motion No. 2 because it is too limiting. The government and I appreciate the hard work of all our colleagues from all parties.

It is good to be able to say that we will support Motion No. 3 as moved by the Canadian Alliance.

[Suzanne Tremblay, Bloc, Rimouski-Neigette-Et-La Mitis, QC]

Mr. Speaker, I am hugely pleased to speak today in the context of Bill C-25, an act to amend the Farm Credit Corporation Act and to make consequential amendments to other Acts.

I am also pleased to announce to my colleague in the Canadian Alliance that the Bloc Quebecois will support the three amendments he has proposed. Both the Bloc Quebecois and the Canadian Alliance tried everything in their power, while the committee was studying the bill clause by clause, to propose amendments. In some instances, the Canadian Alliance presented an amendment similar to our own, and we withdrew ours in order to debate theirs.

Once again, we had the annoying experience of running headlong into an arrogant government, and an even more arrogant head of the corporation.

We noted that, basically, we were coming to parliament, but the die had already been cast. The members can take that as they will, that is their business.

We came here to legislate what the board of the Farm Credit Corporation had already decided. So much so that, at one point, the Bloc Quebecois had proposed an amendment to limit loans to $1 million. In discussions, we went as far as $5 million; actually, FCC loans should not exceed $5 million.

I know members will be very interested to learn that the head of the Farm Credit Corporation said “There is no point your introducing this amendment, my board of directors has already decided that the maximum loan would be $20 million”. Of course, we looked completely silly wanting to limit loans to $1 million or $5 million, when they had already decided they could lend up to $20 million.

That means that the Farm Credit Corporation wants to change its mission. Until now, the Farm Credit Corporation had been helping primary producers. It tried to help businesses which, very often, had not been able to get loans from traditional financial institutions. The FCC was there for the small farmer, the family farm that had problems making it.

Now, the Farm Credit Corporation will have a new name. It will be called Farm Credit Canada. It is intended that this new corporation will lend up to $20 million. It remains to be seen to whom that money will be lent. This suggests that we could have unpleasant surprises, because the Farm Credit Corporation could end up funding businesses that are either upstream or downstream in relation to traditional farm production and to traditional small farms.

According to the figures that we were given, currently, 94% of the corporation's loans are made to primary types of farm productions. We wanted to put it in the act that we were giving them a chance. We said that at least 80% of the loans should be made to primary farm productions.

We are truly concerned that the Farm Credit Corporation will fund mega-industries. When we look at how this government is behaving, that concern is justified. Since the past is indicative of the future, we are justified in being concerned by the government's action.

Then the government told us “We held consultations in Quebec. Everyone in Quebec agrees with this”. Everyone in Quebec was opposed to Bill C-7, but it did not stop the government, which is now telling us that “Everyone in Quebec agrees with us. They all agree with the Farm Credit Corporation”.

We contacted the UPA, or Union des producteurs agricoles du Québec. In a press release—not written by the Bloc Quebecois, but by the UPA—the union said:

We have reservations about the Farm Credit Corporation broadening its current mandate to include the funding of non-farming businesses that are not majority owned by farmers and to provide venture capital to businesses related to agriculture.

That is the UPA's position, not what we were told, which was that the UPA was in complete agreement with the government's bill.

I went further in my quest to check out what I was told. I always make a point of checking things out. The Fédération des caisses populaires Desjardins du Québec also told us it had reservations about the Farm Credit Corporation broadening its mandate to include companies upstream and downstream of agricultural production. In the lower St. Lawrence region prior to 1998, the corporation was not very present and it existed alongside the Société de financement agricole du Québec and the financial institutions present in the lower St. Lawrence region.

In fact, the corporation's interest rates were higher, credit conditions were more stringent, and the Farm Credit Corporation was less aggressive on the regional market. In those days, the Farm Credit Corporation was an alternative for farmers when they were turned down for a loan by the financial institutions or the Société de financement agricole du Québec.

Since 1998, the situation has changed completely. It must be remembered that, when the Farm Credit Corporation lends money, it gets it out of the pockets of Canadian taxpayers; this is the public's money. The corporation takes this money and engages in unfair competition with caisses populaires and financial institutions.

What does the Farm Credit Corporation do? It sends its officials out to the 5th, 6th or 7th concession to visit farms. They knock on doors and ask “You wouldn't happen to need any money, would you?” No longer need a farmer go and visit the banking institution. Now the banking institution leaves Ottawa and heads for the best farms in Quebec. They are hard to miss.

They find the best, most productive farms, knock on the door and ask “Could we by any chance lend you some money? Do you happen to need any? We will give you a great deal. We will lend it to you at at least 0.5% less than any other financial institution”.

In the City of Laval, they even went so far as to make a loan at 1.5% under the going rate; in Nicolet, for some loans the rate given was 1.1% under.

When we are told that people in the financial institutions are satisfied, it remains to see what the banks have to say. The banks submitted a brief to the Standing Committee on Agriculture and Agri-Food in which they stated:

Canada's banks are in favour of competition in the marketplace by institutions that are all subject to the same regulations.

We are, however, of the opinion that government agencies such as the Farm Credit Corporation, which operate thanks to government support and are not subject to the whole range of prudent regulatory requirements, ought not to be mandated to be in direct competition with private sector financial institutions.

Such a mandate falsifies market competition by enabling such suppliers of services to carry out activities under conditions that are not only different but less stringent than those applied to others in the same field.

Here we have a bill that is extremely dangerous for the financial institutions of Quebec and Canada. This will be an institution, an agency, in unfair competition with the financial institutions, which are governed by very, very strict rules.

As a result, although we in the Bloc Quebecois will support the Canadian Alliance amendments, we are unfortunately obliged to not support the government in the passage of Bill C-25.

[Kevin Sorenson, Canadian Alliance, Crowfoot, AB]

Competition is good. I hear the Liberals questioning and heckling about competition. We love competition and a competitive economy, but businesses do not want to compete with the federal government. They do not want to compete with their own tax dollars. They do not want to compete directly with a federal corporation or institution in which they have put tax dollars.

We are also concerned that the expanding powers of the FCC would simply duplicate the existing authority of other public financial institutions such as the Business Development Bank. The Business Development Bank, which realistically does not have a great track record, would then perhaps move out of areas dealing with agriculture.

It would appear that Farm Credit Corporation would simply deal with agriculture and not the farm. Its name is to be changed to Farm Credit Canada. Maybe it should just be changed to agriculture because they have forgotten the family farm.

Our amendment would ensure that FCC's new powers do not duplicate the authority problem that is currently present in the Business Development Bank. We are also very concerned about one aspect which we brought to committee and which the hon. member for Cypress Hills—Grasslands raised in the House on a number of occasions.

We are concerned that Bill C-25 will allow Farm Credit Corporation or Farm Credit Canada to become a significant land holder. The amendment is designed to ensure that the federal government does not become a major holder of Canadian farmland. By so doing it would not influence the market price of land.

I think we would agree on all sides of the House that we have seen places and times in Saskatchewan when there was a great land bank. The government owned land that had been turned back to it. We want to see changes that would prohibit the owning of farmland by the government, thus influencing the market value of land.

Our concerns on this subject were increased during the clause by clause debate in committee. The chairman of FCC indicated that it could consider taking possession of land in the government's yet to be announced plans to facilitate intergenerational transfer of farmland. FCC and the government should have no objections to this motion because the FCC has stated in testimony before the committee that it was not its intention to become land holders.

We have seen time and time again that intentions may be the best, but obviously sometimes legislation allows for loopholes or just the opposite. Farm Credit has also testified that it works to ensure that land is sold at prevailing market prices and that FCC does not influence land values. All members of the House, even those on the other side, believe that the longer a federal government corporation holds on to land it will not sell it for this price because it has money vested in it. As long as that happens it will influence the value of that land on the market.

Motion No. 3 is similar to an amendment we brought forward at committee. With the consideration and the wisdom of the House I believe that all three amendments and recommendations will be accepted.

[Kevin Sorenson, Canadian Alliance, Crowfoot, AB]

moved:

Motion No. 1

That Bill C-25, in Clause 5, be amended by replacing lines 12 to 18 on page 2 with the following:

“services and products to farming operations and to those small and medium-sized businesses in rural Canada that are businesses related to farming. The primary focus of the activities of the Corporation shall be on farming operations.”

Motion No. 2

That Bill C-25, in Clause 5, be amended by replacing lines 32 and 33 on page 2 with the following:

“that complement but do not directly compete with those available from the private sector, or that complement but do not duplicate those provided by other publicly owned institutions;”

Motion No. 3

That Bill C-25, in Clause 5, be amended by adding after line 44 on page 2 the following: f .4.1) dispose of farmland acquired by it, provided that the disposal is at fair market value and is done as quickly as possible, and in any case no longer than five years, after the acquisition.”

Mr. Speaker, again it is a privilege to stand in the House to debate some amendments to Bill C-25, an act to amend the Farm Credit Corporation Act.

It was my privilege to attend committee meetings and to hear the witnesses. We were fairly apprehensive as we went into the exercise of looking at Bill C-25. After the committee meetings we were even more apprehensive and maybe more concerned about some of the legislation that was being brought forward in this change.

The first amendment is designed to address one of our party's most serious concerns about Bill C-25, that the corporation would lose its focus of providing service to farmers because of its involvement in off farm businesses.

One concern of the Canadian Alliance and other members is that the Farm Credit Corporation would move away from being directly involved to the extent it is now in the family farm into a new realm that is currently controlled or benefited by other corporations. Consequently we believe the legislation would allow the Farm Credit Corporation to fund, help and provide service to larger businesses.

According to the current wording of the bill, the FCC could loan money to any agricultural business no matter how large or lucrative. For example, if an application were made by the Saskatchewan Wheat Pool to the government, the government could conclude that the FCC could help with the financial requirements the Saskatchewan Wheat Pool would be after. The amendment would ensure that any services offered to non-farm operations would only be given to small and medium size businesses and not to large corporations.

In committee the FCC and government officials said they would have no reason to fund the Saskatchewan Wheat Pool. That would move beyond the FCC's mandate. However the legislation as it is would not limit or prevent that from happening. If that financing began to happen we would soon see that the family farm would be put on the back burner and would lose another opportunity for funding.

The second amendment is designed to ensure that the federal government does not actively compete with private financial institutions, banks or credit unions. One of the interesting facts that came out of our committee meeting was from representatives of Canadian credit unions. They made very clear that in a number of instances the Farm Credit Corporation was directly competing for business the credit unions had already had.

In one instance the Farm Credit Corporation after hearing what interest rate percentages the credit union was offering competed by lowering its interest rate.

[The Deputy Speaker]

Before we begin debate there is a ruling that I must render. There are three motions in amendment standing on the notice paper for the report stage of Bill C-25, an act to amend the Farm Credit Corporation Act and to make consequential amendments to other acts.

Motions Nos. 1 to 3 will be grouped for debate and voted on separately.

Before putting the motions to the House I wonder if I might call upon the member for Crowfoot to seek consent to move the motions.

Business Of The House

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, this afternoon we will continue debate on the Bloc opposition motion.

On Friday we would like to commence consideration at report stage and third reading of Bill S-24, the Kanesatake legislation. We would then take up the report stage of Bill C-11 on immigration, followed, if there is any time, with the report stage of Bill C-25, the Farm Credit Corporation legislation.

When we return on Monday, we will commence debate at report stage and third reading of Bill S-17, the patent legislation.

On Tuesday, we will proceed with third reading of Bill C-11.

On Wednesday, we will take up report stage and third reading of Bill S-16, the money laundering legislation, followed by report stage of Bill C-25 if necessary.

I know all members have been reading with attention the report of the commission, chaired by the hon. Ed Lumley, on compensation which was tabled earlier this week. I hope to continue consultations next week and would hope that we could find a way to deal with these issues at that time in relation to the report provided to us by Commissioner Lumley and others.

Committees Of The House

[Charles Hubbard, Liberal, Miramichi, NB]

Mr. Speaker, I have the honour to present, in both official languages, the first report on Bill C-25, an act to amend the Farm Credit Corporation Act and to make consequential amendments to other acts, without amendment.

I would like to thank the members of our committee for their attention and due diligence in considering this legislation and bringing it back to parliament.

Farm Credit Corporation Act

[The Speaker]

The House will now proceed to the taking of the deferred recorded division on the motion at the second reading stage of Bill C-25.

Division No. 81

[Marlene Catterall, Liberal, Ottawa West—Nepean, ON]

Mr. Speaker, I think you would find consent that the vote just taken be applied to the vote on second reading of Bill C-25.

Farm Credit Corporation Act

[Carol Skelton, Canadian Alliance, Saskatoon—Rosetown—Biggar, SK]

Mr. Speaker, I rise today to speak to Bill C-25, an act to amend the Farm Credit Corporation Act. As a mother living on a family farm and who has lost two sons from that farm, I speak passionately about the Farm Credit Corporation and the institution that it is in western Canada and for farmers.

It provides services that are not available through other more traditional financial institutions. Farmers have come to rely upon the Farm Credit Corporation. The bill would expand the focus of the Farm Credit Corporation past its original purpose of providing financial services only to family farms and the businesses that are directly related to primary production.

The lending role of the Farm Credit Corporation would be expanded to allow the corporation to lend to other businesses that are not necessarily directed or involved in primary agriculture production and do not necessarily have farmers as major shareholders. It raises some serious issues with respect to government getting involved in areas where the private sector already operates.

By extending the lending abilities of the Farm Credit Corporation beyond primary production, the bill would bring the Farm Credit Corporation into direct competition with private lending institutions and would overlap with other government institutions such as the Business Development Bank of Canada.

The problem with the proposal is that it lacks clear definition. It is not stated clearly. It raises more questions than it answers. For example, if the Saskatchewan Wheat Pool needed an infusion of cash, would the provision allow the Farm Credit Corporation to become a major lender to the Saskatchewan Wheat Pool? That is of great concern to a lot of people. The Canadian Alliance has always opposed government expansion into areas already competently served by the private sector.

Bill C-25 would formalize the ability of the Farm Credit Corporation to own and lease land. The Farm Credit Corporation has stated that it is not the intent of the amendment. It claims the leasing provisions would be for equipment. However it is not made clear in the legislation.

It is not appropriate for the federal government to be the owner of farmland. Canadian farmers are supposed to own farmland. Allowing the Farm Credit Corporation to permanently hold and lease land could result in the government holding and influencing the market value of farmland. We have seen that lately in our own district.

Allowing the Farm Credit Corporation to permanently hold and lease land may also provide the corporation with an incentive not to pursue every possible means to allow farmers to stay on the land if they are experiencing financial difficulty. In short, the bill could provide Farm Credit Corporation with an incentive to prematurely foreclose on farmers.

Even under the current legislation the Farm Credit Corporation has become a significant landowner. In 2000 the Farm Credit Corporation owned over 360,000 acres in Canada. Ninety-five per cent of that land is held in Saskatchewan, the province that has been the hardest hit by the farm income crisis. That is scary. The last thing Saskatchewan needs is for the federal government, through the Farm Credit Corporation, to start distorting the market value of farmland.

While it is impossible for the Farm Credit Corporation to avoid holding land for short periods of time, the act should explicitly state that the Farm Credit Corporation should divest itself of any holdings as quickly as possible. My party hopes to convince the government to bring forward amendments to the bill to clarify this situation.

Bill C-25 would extend the lending ability of the Farm Credit Corporation into the area of equity financing. It would be done by allowing the Farm Credit Corporation to hold non-fixed assets such as cattle as collateral for loans. This change would allow the Farm Credit Corporation to provide farm financing to primary producers who are not eligible under the current legislation. In many cases it would provide financing that would not be available from private lenders. It is a positive change to legislation of which my colleagues and I are supportive, provided financing is limited to operations involving primary producers.

A point not directly addressed by the legislation is the issue of fairness. In many cases the Farm Credit Corporation treats supply managed sectors differently than it does sectors not governed by supply management. This is something that my party is opposed to. It would be far better for the Farm Credit Corporation to treat equally all producers, regardless of which sector they may be a part.

Once again we have a situation where the Liberals have introduced provisions that we object to for sound reasons coupled with reasons we support. Extending the equity financing capability of the Farm Credit Corporation to non-fixed assets like livestock is certainly a positive move and one which we support. However, if we put that up against extending the ability of the Farm Credit Corporation to lease and hold land and to lend beyond primary producers we have a stalemate.

As a result, the Canadian Alliance has decided to oppose the legislation unless significant amendments are made to clarify the problems I have identified.

[Kevin Sorenson, Canadian Alliance, Crowfoot, AB]

Mr. Speaker, once again I am honoured to rise in the House to debate issues that are specific to the agriculture sector.

As a farmer and member representing a predominantly rural riding where the agriculture industry is a major economic engine of our communities, anything related to farm and to finances is extremely important to me, as it is to my constituents.

Bill C-25 is an act to amend the Farm Credit Corporation Act. It proposes to modify the role of the Farm Credit Corporation. What does Bill C-25 do?

First, Bill C-25 will change the name from Farm Credit Corporation to Farm Credit Canada.

Second, it expands the role of the Farm Credit Corporation to allow the corporation to lend to businesses that are not necessarily directly involved in primary agriculture production or do not have farmers as the majority shareholders.

Third, it expands the lending role to let Farm Credit Corporation provide equity financing by allowing it to hold non-fixed assets such as cattle as collateral.

Fourth, it formalizes Farm Credit Corporation's leasing ability which, although not specific, could include farmland.

Today is the last day of April. We are back on a Monday. After I spent the weekend in my constituency back in Crowfoot travelling throughout the constituency I can tell members that it is very apparent that farmers are in the field.

We were promised and guaranteed by the federal agriculture minister that Canadians would see financial help before the seed was put in the ground. That has not been the case. As we travelled throughout the constituencies people continuously asked where the money was that was promised by the federal Liberal government.

We were home this week. Springtime is usually the time where spirits are high as farmers look forward, with great expectation, to preparing the soil, seeding, planting, putting in their crops. Spirits are not high on the family farm and throughout western Canada and rural Canada. As we travel throughout the constituencies we see that it is a cloudy horizon, a troublesome horizon.

I do not know how I could explain to the House some of the things that we saw as we travelled throughout Crowfoot this past weekend. In the distance we saw on the horizon clouds that looked like they were fires. They were not fires. They were dust clouds. They were dust storms. The wind was blowing hard; it was hot and dry and the dust was blowing. Farmers were turning off the tractors and shutting them down because they realized that the more they cultivated the more the moisture disappeared. They were already laying the seed into a dry bed, so to speak.

Spirits are not high. As farmers go to the fields, they realize that this spring input costs have soared and are going through the roof. Fertilizer costs have nearly doubled from last year. Commodity prices are in the pit. Barley is around $2, wheat is $3 and canola is under $6. Commodity prices farmers are getting have not kept up with the input costs. Hope is diminishing.

Through the winter our farmers were writing and calling and stopping at the office asking what we could do about the heating bills. Working in the shop was almost ruled out because they were trying to save on their heating bills. The troubles just seem to go on.

However, have no fear, because the Liberal government has come forward with a proposal that will change the name of the Farm Credit Corporation, a proposal that will expand the lending abilities of the Farm Credit Corporation to allow it to now lend to businesses, not just farmers, not just the family farm, but remotely related agriculture businesses. That just does not sell down on the farm. That just does not sell where the rubber meets the road.

With regard to the name change, the federal government believes that this name change is absolutely necessary to affirm its federal identity to the program and to the corporation. I was born and raised on the family farm and have been farming actively for over 20 years. I think it is a very well known fact that the Farm Credit Corporation is an agency of the Government of Canada. I therefore do not necessarily agree that the name should be changed, particularly if it will result in the needless expenditures of scarce federal dollars for agriculture and agriculture related programs.

Currently 94% of the corporation's financial services are directed to farmers and businesses that are directly related to primary production. Recognizing that expanding the lending capability of FCC may strain the corporation's ability to service farmers' demands for credit, I must oppose this amendment to the FCC act.

The Canadian Alliance, as stated by my colleagues earlier today, does not agree with extending Farm Credit Corporation's involvement beyond family farm operations. The extension of that lending ability beyond primary production may bring Farm Credit Corporation into direct competition with private lending institutions and may overlap the government's institutions such as the federal Business Development Bank.

We should think of what the Liberal government is trying to accomplish. It says we need money. It says we need to provide financing for farmers and for agriculture related businesses, but now it would open up the floodgates to other businesses that are not necessarily primary producers or tied to producers.

I believe the government has perhaps changed the wrong name. Maybe it is not the word corporation that it should get rid of, but the word farm, because the legislation would take money off the farm tables and undoubtedly put it onto many business tables, and it may also effectively end up remaining on cabinet tables. The problem we are seeing in rural western Canada is that there are not enough funds being put onto the kitchen tables on the majority of farms.

Why not change the name to Canada Credit Corporation, CCC? It is easy to remember. Then the word farm will be taken right out of the equation. We could change it to CCCP, like the hockey team's sweaters that read CCCP, Canada Credit Corporation Policy. Maybe that is what the government should be looking at. It might be as effective.

With regard to formalizing the leasing ability of FCC, the government has stated that the intent is not to include land. Rather, it claims the leasing provisions are for equipment. However, this is not made clear in the legislation. This will definitely be one of the amendments which I hope will come forward through our very good agriculture critics in the Canadian Alliance, or all parties could bring that amendment forward.

The Canadian Alliance does not think it is appropriate for the government to be holders of farmland. We believe that if Farm Credit Corporation is allowed to permanently hold and lease land, it could result in the Canadian government's holdings influencing the market value of farmland. While we accept that it is impossible for Farm Credit Corporation to avoid holding land for short periods of time, the act should explicitly state that Farm Credit Corporation should divest itself of any holdings as quickly as possible.

A number of years ago I looked for packages of farmland on a map of Saskatchewan. As I looked at the central Saskatchewan area, close to Central Butte and Riverhurst and some of those areas, I was appalled to see how much farmland was actually held by Farm Credit Corporation. It held quarters and quarters of land.

That will happen. It is evident, especially with what farming and agriculture have gone through. However, the responsibility of the government and the responsibility of Farm Credit Corporation must be to hold that land for a very short period of time to allow the market to set the value, to disperse it and to give hope to young people who want, for some reason, to get into farming.

We support extending FCC's lending ability to include equity financing. We applaud it. It is a great idea, but as stated before, we want that given only to primary producers. That portion of the bill must be related only to those who are farming and involved in primary production, those who are making their living by putting the seed in the ground or raising cattle or any of the other things primary producers are doing. Allowing non-fixed assets such as livestock to be collateral for loans would greatly assist farmers who are currently not eligible for financial assistance.

The Canadian Alliance certainly encourages increased financial assistance for cash-strapped farmers toiling endless hours a day producing the high quality food products that Canadians have come to appreciate, enjoy and expect. Unfortunately the federal Liberal government's failure to provide farmers with a much needed cash injection will result in more farmers depending on loans to get their crops in the ground this spring.

As raised in the House on many occasions in the brief three months of this session of parliament, farmers have continually come here, lobbied and asked the government for a minimum of $900 million. I have heard some groups explain to the government why they needed a minimum of $1.6 billion, others why they needed $1.2 billion, but it was generally accepted that the lowest figure was the minimum of $900 million. The government however saw fit to come forward and provide only $500 million.

We therefore proposed on March 20 in a supply motion that the government authorize the expenditure of an additional $400 million. En masse Liberal members of parliament voted against our motion and again the federal government denied farmers the much needed financial assistance. My colleagues have repeatedly stood in the House expressing our sentiments and those of our constituents regarding this financial holdout.

Today I would like to share with all members of the House the opinion of Mr. J. J. Huber of Midale, Saskatchewan, as written in a recent edition of the Western Producer . I ask members to listen carefully. He stated:

It makes me sick to my stomach to have to listen to the senseless dribble coming from our rural Liberal MPs. They talk the talk, but when their job is on the line, they cannot abandon the Canadian farmers quick enough. I tell you, if we lose 45 percent of our farmers in the near future, agriculture will become a non-issue in Canada. Maybe we should just seed all arable land to grass and we can import all of our ag products from the U.S. or U.K. because they are the only people left in this world who care about their agriculture industry.

And when our consumers in Canada give their urban MPs grief because the price of food has quadrupled, who will the MPs run to then?...The farm gate is just the starting point.

He continues:

To hear the MPs say that farmers or other common folk don't understand politics, what's not to understand? It's really simple: you lie to the people and tell them how you will speak for them, and once the waters get a little rough in Ottawa, you ditch the people who you represent because you might lose your job if you actually do what your constituents want you to do.

You then do a 180-degree turn and tell your constituents that they do not know much about politics and that your abandoning them is just part of the political game. I don't know of any other job in the world where you can continue to lie to the people who pay your wages, and turn your back on them when they want you to actually do your job, and still continue to get paid. Politics, it makes me sick to my stomach.

Agriculture, politics, I think it tends to make all of us a little sick to our stomachs.

However, I say to Mr. Huber that he should take great strength because the government has come up with a bill that would give a name change to Farm Credit Corporation. Does that make Mr. Huber feel better?

If that does not quite do it, he can understand this. The legislation will allow not just farmers to receive the help from a lending institution of this Canadian government, Farm Credit Corporation, but it will also allow help to other businesses so that the government can stand and say x amount of dollars is available to farmers and to agriculture when actually in effect it is going to businesses that are not even related as primary producers. Does that make Mr. Huber feel better?

What about expanding the lending role to let FCC provide financial equity by allowing it to hold non-fixed assets as collateral? There is a little grab-all in every legislation. Maybe that is the one little bit that we need to grab hold of and put our hope and our trust in for better help. What about the pill to formalize FCC's leasing ability, which could include farmland? How does that make Mr. Huber feel? Mr. Huber and young people across Canada would have the ability to lease back land.

There was a hope that we could own our farmland, make payments and pay off debts. Now we have the ability to lease it back from our federal government. Despite the financial hardships that our farmers must endure as a result of increased costs of production, the legislation needs to be changed. We can change it and make it truly effective. The legislation is a bitter pill to swallow, as I study it further and see it coming down the pike described as some type of agricultural help.

Agriculture

[Howard Hilstrom, Canadian Alliance, Selkirk—Interlake, MB]

Mr. Speaker, Arnold Schmidt is a prairie farmer who has diversified into organic wheat production.

Mr. Schmidt has gone further than just growing organic grain for a niche market. He has developed sales for organic flour milled from his own grain. This is exactly the type of initiative that will bring agriculture out of the current income crisis caused by the disastrously low world prices for traditional crops.

Unfortunately, Mr. Schmidt cannot get an export permit for his organic flour from the Canadian Wheat Board. This is in spite of the fact that the Canadian Wheat Board provides no marketing services to him. This is wrong.

The government claims that it has introduced Bill C-25 in order to promote value added processing. What it refuses to understand is that the best way to promote diversification and value added processing is to get out of the way of entrepreneurs like Mr. Schmidt.

The Canadian Wheat Board minister is personally responsible for not helping organic farmers.

Farm Credit Corporation Act

[Garry Breitkreuz, Canadian Alliance, Yorkton—Melville, SK]

Mr. Speaker, it is a pleasure to address an issue of great importance to my constituents. I will be raising questions that the government must answer before we can continue the debate. I look forward to hearing the answers which will, hopefully, be forthcoming.

For those watching on television, I will outline what we are debating today. Bill C-25 is an act to amend the Farm Credit Corporation Act and make consequential amendments to other acts that affect this area.

The purpose of the bill, as outlined by the government, is to modify the role of the Farm Credit Corporation. The bill proposes changes to three key areas.

The lending role of the FCC would be expanded to allow it to lend to businesses which are not directly involved in primary agricultural production and in which farmers are not necessarily the majority shareholders.

The lending role of the FCC would also be expanded to allow it to provide equity financing. This could be accomplished by allowing the FCC to hold non-fixed assets, for example cattle or other things, as collateral. Bill C-25 would formalize the FCC's leasing ability which could include farm land.

This is of primary importance to the people of Saskatchewan. I looked at some of the figures put out by the Farm Credit Corporation. Saskatchewan alone has $1.3 billion in loans. That is second only to Ontario, which has $2.1 billion. The other provinces fall in line. Alberta and Quebec are next with a little under $1 billion in assets in the portfolio.

Because that is of such critical importance to the people of Saskatchewan, and with the farm crisis we are currently experiencing, it is important that the government handle the issue very carefully. We need to ensure that primary producers, farmers of Saskatchewan, are properly protected and that we do not move away from properly serving them through the Farm Credit Corporation.

The bill before us would expand the focus of the Farm Credit Corporation past its original mandate of providing financial services only to family farms and businesses directly related to primary production. We need to ask whether the Farm Credit Corporation's involvement should go beyond direct farming operations and, if so, how primary producers would be protected.

My colleague from B.C. who is sitting beside me would ask the same question in relation to things that go on in B.C. People in the Maritimes would also like to know how they would be protected. They would like to know if the focus of the FCC would continue to be on farmers and their needs.

If we extended the FCC's lending abilities beyond primary production the bill would bring the Farm Credit Corporation into direct competition with private lending institutions and make it overlap with other government institutions such as the Business Development Bank.

In the little town I come from there is a credit union that was established many years ago to serve the clientele in that area. It is a co-operative of sorts. I need to know if the FCC will directly compete with organizations which were established to serve local people and which have done an excellent job of doing so. Sometimes a good thing can undermine one that is even better. We need to ensure that does not happen.

There is tremendous openness for interpretation in some of the bill's clauses. I will read a section from the bill:

The purpose of the Corporation is to enhance rural Canada by providing specialized and personalized business and financial services and products to farming operations, including family farms, and to those businesses in rural Canada, including small and medium-sized businesses, that are businesses related to farming. The primary focus of the activities of the Corporation shall be on farming operations, including family farms.

It sounds wonderful. It sounds good. It is an intention that we could never disagree with, but years down the road how will it be interpreted? What will a business related to farming include? What will it consist of?

Unless we have an assurance that somehow primary producers, farmers, will be protected, we would have difficulty supporting this idea. The idea is great, but we need to know what will happen and how it will be interpreted in the future.

We also note Bill C-25 that we are discussing will formalize the FCC's ability to own and lease land. The FCC has stated that this is not the intent of the amendment. It claims that the leasing provisions are for equipment. However, again the legislation does not make this clear. It can give the government the mandate to make changes behind the scenes, to slip in changes that would affect agriculture very adversely. It is not like other legislation that is often brought before the House. It is enabling legislation.

Through the administration of the bill many changes can be made that were not anticipated when the bill was debated in the House of Commons and often received the support of many members. We need to know if this will give the FCC the ability to begin to own land, possibly for long periods of time, without any limit as to how long it can hang on to the land.

Will this inflate the price of land and cause hardship for many farmers who right now have a difficult time competing with those who are not directly involved in agriculture? We need to know if that will be the case. We do not see any limitations within the bill that address some of these concerns. Will the FCC be allowed to permanently hold and lease land that could result in the market value of farmland increasing and hurting primary producers?

Those may not sound like major concerns at this point but years down the road, once the legislation comes into full effect, it could hurt the people involved across Canada. Allowing the FCC to permanently hold and lease land may provide that corporation with the incentive not to pursue every other possible means to allow farmers who are experiencing financial difficulty to stay on the land. In short, the bill could provide the FCC with the incentive to prematurely foreclose on Canadian farmland.

Will the FCC continue to look at its mandate to help farmers or will it become more involved in ensuring that the corporation is financially successful? That could have a very negative effect. We need to have the assurance and the proper amendments need to be made so that farmers have the guarantee that it will not move away from its mandate.

I read the clause in the bill which can be interpreted in many other ways. We would agree that businesses in rural Canada, including small and medium size businesses and businesses related to farming, should get the help they need, but how far away from farming does a business have to be before one begins to say it is not really related to farming?

Will the Saskatchewan Wheat Pool be eligible for loans under the legislation? I would like to know. I do not know. We are asking some tough questions that need answers.

Under the current legislation, the FCC will become a significant landowner. In 2000 the FCC owned over 360,000 acres. Guess where most of that farmland was owned? Some 95% of it was in the province of Saskatchewan, the province that is experiencing the most difficulty right now in the farm crisis. Not to belittle the problems that farmers are having in Manitoba, Alberta and across the country, but this is having a major impact because of the dependence on grain and oilseed crops in the province.

While it is impossible for the FCC to avoid holding land for short periods of time, the act should somehow explicitly state that the FCC would divest itself of any holdings as quickly as possible.

Bill C-25 also extends the FCC's lending ability into the area of equity financing. This would be done by allowing the FCC to hold non-fixed assets such as cattle as collateral for loans. This change would allow the FCC to provide farm financing to primary producers who are not eligible under current legislation. In many cases this would provide financing that would not be available from private lenders. This is a very positive change to the legislation. The funding that would often be limited to primary producers would no longer be available.

In the Canadian Alliance policy we state very clearly that we will foster a healthy economic environment for the benefit of consumers by pursuing free and open trade at home and abroad, including the elimination of interprovincial trade barriers.

We will withdraw government from areas of the economy where the private sector could deliver the same services more efficiently. We will end the unfair practice of providing subsidies to industries, businesses and special interest groups.

We do not want the government to compete with areas in the private sector that are providing a good service and possibly undermine that service. That is what we are saying in our policy and we stand by that.

We will withdraw from areas in the economy where the private sector could deliver the same services more efficiently. I already pointed out that they might be competing with another institution, namely the Business Development Bank.

Will Bill C-25 take away the primary focus of the FCC from providing credit to primary producers? If that were to happen, we as Canadian Alliance members of parliament believe that this would be a shift in the wrong direction. This would be a move away from where we should be moving.

The FCC should not be providing funding for non-farming operations if it hurts farmers and primary producers. Lending institutions are already in that area, for example the Business Development Bank of Canada.

We in the Alliance Party do not want the Farm Credit Corporation under Bill C-25 to go into direct competition with private sector lenders. That would be wrong and that would get the government involved in areas that it should not be involved in. That is a basic policy area of the Canadian Alliance.

The bill formalizes a lot of the FCC's leasing ability. We have to be very careful. Short term ownership of land is unavoidable in some cases, but the FCC should not go into the business of owning farmland in the long term. It could inflate the price of land and hurt the whole agricultural sector. This might make it more difficult for farmers and for primary producers to get credit where they normally would be able to access that credit.

I have a couple of other questions, but the key question still needs to be asked and has to be answered by the government. Does the bill ensure that farmers will be properly served? Will farmers have to compete for capital now that they normally did not have to compete for before?

I need to mention something else. Will Canadian taxpayers be on the hook for loans that would not normally have been made but would be made and in turn be a higher risk loan? Would taxpayers be on the hook for any bad decisions made?

I mentioned about this being enabling legislation, enabling the government to do things behind the scenes that it would not openly do. I am noted for following the Firearms Act issue. One thing I have found through that piece of enabling legislation is that the government has brought forward many things it originally said was not its intention, such as private police and enforcement agencies. The kinds of things we were assured would not happen are in fact happening.

What does that have to do with this legislation? Will this bill be an open book for the government to bring in government policy through the back door that may hurt farmers but may not be directly visible at this time? We need to have that kind of protection. Are the changes here in the best interest of farmers?

Will adequate provisions be made in Bill C-25 that would prevent the FCC from bailing out large, non-farmer owned businesses at a future date? I do not see that protection right now. Large corporations could possibly access capital for a bailout that would hurt farmers directly. A large agribusiness, possibly even a multinational agribusiness, could access the money unless there are proper provisions put in place that this would not happen.

If we read the legislation it sounds good, but it could be interpreted years down the road in a very different manner than we are expected to interpret it at this point. Would a limit be set on the size of loans offered to businesses that are not majority owned by farmers? We need to have that protection put in the bill.

Would a farm equipment dealer be able to access the resources of the Farm Credit Corporation? Could these businesses access capital through other lending institutions? We do not know what checks and balances will be provided to ensure that certain companies will not be able to access the capital, which would then remove that capital base or pool of capital from primary producers.

All these things need to be addressed. I should like to hear some of these questions answered by the government. I see that my time is up. I have asked what I think are the key questions farmers in my riding are asking. I would like the government to answer those questions today.

[Rick Borotsik, Progressive Conservative, Brandon—Souris, MB]

Mr. Speaker, I listened to the comments from the previous speaker. We have gone off in a different direction with respect to the bill before us right now, the bill dealing with the Farm Credit Corporation. However I will touch on that other direction just for a moment.

As members are well aware, I am the Progressive Conservative Party critic for agriculture. I have obviously had a lot of dealings not only with members on this side but with members on the government side as well as producers. In my constituency, agriculture is the backbone of our economy and therefore I deal with this issue on a daily basis.

As for the dollars that were earmarked for the agricultural economy, dollars that were to go back to producers, the $500 million, different provinces are providing those dollars in different fashions. In Manitoba we call it CMAP 2, the second program. With provincial and federal contributions, it will come to about $92 million. That has been capped at about $11,000 for each producer. To the member for Toronto—Danforth, $11,000 might sound like an awful lot. However, currently it is costing the average producer somewhere in the neighbourhood of $120,000 to $150,000 to put a crop in the ground. Input costs such as those for fertilizer, gas and pesticides are included. Therefore the $11,000 is not a substantial amount of money.

The member for Sackville—Musquodoboit Valley—Eastern Shore was right when he indicated that there was an additional requirement for $400 million. That would have brought it up to what we consider to be a reasonable limit of $900 million at that time.

I do not want to get into a debate, but every member on that side of the House stood and voted against an additional $400 million. It was not a non-confidence motion. It was just not meant to be. The amount of dollars that were necessary at the time were not forthcoming.

For producers who will receive their portion of the $500 million, it is not sufficient to keep most of them on the land, on the farms this year. A long term well thought out safety net policy is necessary and must come forward, a policy that would allow farmers some glimmer of hope they can produce crops that pay a fair price for a commodity and that they can continue farming not only in their lifetimes but hopefully into the lifetimes of their children and their grandchildren.

We are here not only to talk about agriculture but a component of agriculture, the Farm Credit Corporation. As we have seen in the debate, agriculture has changed over the last number of years. It has changed effectively from last year. The Farm Credit Corporation has to maintain its ability to compete in that world of change in agriculture.

The Farm Credit Corporation was created on October 5, 1959 by the Diefenbaker Conservative government when the Farm Credit Act was proclaimed into Canadian law to provide a consistent source of lending services that farmers could rely on through all economic cycles. At that time the corporation was mandated to provide one product at a fixed rate, that is first mortgage loans to farmers to a maximum $20,000.

I mention that because we have come a long way from 1959 to today, and the Farm Credit Corporation has to move with that change within the agricultural industry.

During the first 34 years the Farm Credit Corporation and the Farm Credit Act went through many evolutions to keep step with the agriculture industry. In 1968 farming corporations became eligible for FCC loans. Loan limits increased to $150,000 in 1975. In 1982 amendments to the act led to the introduction of more loan products and the FCC made its debut on the capital markets.

In 1993 the Farm Credit Act was replaced with the Farm Credit Corporation Act, which expanded the mandate of the FCC to better respond to the needs of the agricultural sector. The FCC could now offer products such as financing to purchase or improve farmland and buildings, buying personal property for farming purposes and consolidating debts. It enabled the corporation to support value added production by providing financing for diversified enterprises on or off the farm.

The act has helped bring the FCC in sync with the changing marketplace. The Farm Credit Corporation loan portfolio has grown from $3.4 billion in 1993 when the act was introduced to $6 billion today. At present the crown corporation serves 44,000 customers with 900 employees in 100 offices across Canada.

The Farm Credit Corporation is a good corporate citizen. It is there for a purpose. Back in 1959 the purpose was identified, the need was identified and the Farm Credit Corporation was born. It is a good crown corporation that provides a very valuable service to many farm customers across the country.

It is a bank. Let us make no mistake about that. I can go out and find people anywhere who do not like dealing with banks of any sort.

Sometimes people who borrow money do not like paying it back and therefore the bank is at fault. The FCC is a good bank. It does its business properly. It puts money into the agricultural sector. It gets the money back from producers and puts it back into the sector again. It is self-sufficient and self-supporting.

Last year the FCC put record amounts of dollars back into the farm economy. A record amount of $1.7 billion was lent to agriculture producers. We recognize that there are some difficulties in the farm economy right now. Why is it that banks are lending a record amount of $1.7 billion? Is most of it rewriting old notes and old loans? The answer I was given was no.

About $200 million of it was rewriting old notes, but $1.5 billion was new money going back to people to expand their farm operations, to put in different types of operations, agriculture operating practices and value added processing units. It is good money and good business.

The bank must expand its abilities to be able to compete in a world where agriculture needs new and innovative measures and programs. It has done that since 1959 when it started with a maximum $20,000 mortgage loan at one rate. It has gone the whole gambit now. The act would allow the Farm Credit Corporation to put forward new products to producers that would help them continue their operations.

The Progressive Conservative government improved the way FCC was managed. We brought in the FCC equity building plan in 1990 to allow farmers to extend their leases and buy back land once they were on firmer financial ground.

The Progressive Conservatives moved the head office of FCC to Regina so that it could be closer to those who it serviced the most, namely the majority of customers in Saskatchewan, Manitoba and Alberta.

We passed a bill to expand the role of FCC allowing it to make loans to farmers who wanted to diversify their operations. The bank was able to and allowed to put more dollars into the pockets of farmers who wanted to diversify their operations and become better at what they did.

There are a number of components in Bill C-25 that I would like to speak to and in some cases I wish to question. In every legislation one wants to hear from the people whom it will affect. We also want to hear the ups and downs or the pros and cons of amendments to the bill.

I would like to mention another point. The president of the FCC appeared before the agriculture committee last week. I stood in the House about a week ago on a piece of private member's business and suggested having crown corporations including the Canadian Wheat Board open to access to information guidelines.

Members of the government argued against me quite vehemently. They suggested it was my backdoor way of trying to get at the Canadian Wheat Board, which in fact it was not. It was simply a matter of trying to have transparency and accountability in a crown corporation.

The FCC is a crown corporation. I asked the president if the FCC was eligible under the Access to Information Act and he said that it was. I can file an access to information request with respect to the FCC and I would then have access to that information.

I asked the president if it was a real deterrent in a very competitive business like banking. He explained to us that it was not the case, that he did have the ability under the act to withhold some very sensitive information that would be a detriment to the competitiveness of the business, but he said in general terms that having to deal under the Access to Information Act was not an impediment to its operation. I say to the government side that here is one crown corporation, which is in a very competitive business with banks, credit unions and other financial lending institutions, that can work under those circumstances and still have access to information available in its crown corporation.

The bill is a step in the right direction. The PC Party will be supporting reference of the bill to committee after second reading. We look forward to asking specific questions of stakeholders who will come before the committee to give their impressions of the legislation.

The first thing the bill would do is change the name from Farm Credit Corporation, the name which I grew up with and know very well, to Farm Credit Canada. There is not much differentiation between Farm Credit Canada and the Farm Credit Corporation.

We all recognize FCC as a federal institution. I am told that the only reason this is to happen is so that more credit can be given to the federal government. When customers go to farm credit Canada as a crown corporation, they will recognize it as a Canadian federal institution as opposed to a provincial institution.

To me there is much in a name. Perhaps there are reasons that can be explained to me as to why this is absolutely necessary. I would also like to know what the costs are in changing the name from Farm Credit Corporation to Farm Credit Canada. Changes in the letterhead, operating tools, all the documents and required legal changes in a name change may well have a huge cost associated with them. Perhaps it would be better to use those dollars to give producers a lesser rate, or perhaps even more support systems to producers, than simply to change the name. We would have to debate that.

The mandate of the FCC would be expanded from financial services to farming operations and businesses related to farming, to business services and products to such enterprises. That in itself is broadening the mandate of the FCC, of which our party approves.

Farming is changing quite dramatically. In my constituency alone the majority of the economy is either directly or indirectly related to agriculture. We have often said that we cannot simply sell the raw material at the farm gate and expect an income generated that would allow people to stay on the farm. We have to value add. We have to add to the product. We have to make sure that those businesses are set up to take a raw material and make it into something more than just simply a bushel of wheat or a bushel of barley going some place else.

That means a number of opportunities. In my area in particular we have a state of the art hog processing plant which means that more raw material must be produced. That raw material requires a lot of investment in hog farms, cattle operations and chicken farms. The FCC must have the ability to be able to finance those types of operations to allow for diversification in the agricultural community.

Beyond that, looking into the production services and processing services of other businesses can now go forward. We have around my area an isoboard plant that produces strawboard. FCC should, does and would have the ability to fund those operations so that straw taken from agricultural production could go into the production of another commodity that has value.

The FCC should also have the ability to do equity deals, another opportunity in expansion of the services that it would be able to provide.

The FCC would have the authority to provide loans to businesses related to farming in both cases where the business is majority owned by farmers and where it is not. Currently it has to be owned by farmers. Now it can go outside those guidelines, outside the box, and allow dollars to go to loans given to corporations which do not have any direct farmer impact. That is good as it expands the services available from the FCC.

The FCC would be given authority to incorporate, amalgamate and dissolve subsidiaries. It would be able to provide lease financing for assets to be used in a farming operation or a business related to farming. This again is a change in the FCC mandate where there could be lease financing for assets. This would allow operations to free up cashflows to go into the operation or expansion of their businesses.

The FCC would be given the authority to acquire and dispose of equity interests in farming operations or in businesses related to farming. The president of the FCC would be designated as its CEO. A provision would be made for the appointment of an acting president and an acting chairperson where necessary. This is just good business.

As I mentioned earlier, the FCC is a well run and self-sufficient corporation. It has $6 billion outstanding in loans, but it must get with the program of today's 21st century operations of business.

There are potential questions and criticisms. I mentioned the name change and the cost. The bill has the potential to unnecessarily compete directly with credit unions and banks. The purpose of the FCC is to provide loans to farmers and not to equipment dealers and wheat pools.

I say that we must question this, not necessarily disagree with it. It must expand its opportunities to compete. Competition in the banking industry is not so terrible, and neither is competition in grain marketing. Banks and credit unions can compete effectively with the FCC. I do not believe the rules have unfair advantages for the FCC and I am sure banking institutions see it the same way.

Although the bill expands the lending powers of the FCC, farmers do not need more debt. That is one of my concerns. Extending more credit to farmers is perhaps not the best thing for farmers who already have substantial debt. Unfortunately banking institutions too often are more the problem than the solution. Where there is equity in the land moneys will be given to farmers, and that is not necessarily the best thing. However I have faith in the FCC to know what is best for it, for its customers and for the industry.

We have not heard a lot from other members, stakeholders or industry groups, but that is what the committee is all about. Perhaps when witnesses appear we will have a chance to examine the bill more thoroughly and get their input into what is good or bad about the legislation.

On behalf of the Progressive Conservative Party we will be supporting this piece of legislation. I agree in all sincerity with the mandate of the Farm Credit Corporation. It does an exceptional job, considering that it is a bank and that people have as much respect for bankers as they do for politicians. However as a banking facility it does, in my opinion, provide the services that are needed in the agricultural community.

I look forward to coming back to the House after committee and perhaps putting forth amendments. I certainly look forward to coming back at third reading and suggesting that some of the stakeholders proposed good changes to what I consider a good piece of legislation.

[David Anderson, Canadian Alliance, Cypress Hills—Grasslands, SK]

Mr. Speaker, I commend the member for Selkirk—Interlake on his presentation and for sharing his time with me. We are here today to debate Bill C-25, an act to amend the Farm Credit Corporation Act.

The purpose of the Farm Credit Corporation, since 1959 when the Farm Credit Act was passed, has been to provide farmers and those involved directly with production access to loan money. A short history of the FCC shows that major changes have happened over the years, but we can see that it has also maintained its original mandate of providing loans to primary producers over the 40 plus years it has been in existence. It was established in 1959 to provide credit to farmers and specifically to primary producers. At that time the loan rate that money was lent to farmers was set at a legislated rate of 5%.

The 1960s saw substantial changes to the FCC from the initiation of an appeal board in 1965 to the introduction in 1968 of a market formula rate that allowed the FCC for the first time to cover the cost of its borrowing. During the 1970s the FCC expanded and in 1978 it posted its first ever surplus. The 1980s, however, were a much different story. This was a difficult time for much of the agricultural farm sector. The FCC found itself caught in the agriculture squeeze and the federal government was forced to put $600 million into the FCC to keep it solvent.

In 1993 the Farm Credit Corporation Act was passed allowing the FCC more flexibility to fund farmer owned, farmer related agricultural proposals. It was not just farm land that money was being lent on, but farm related businesses could also get loans. However those farm related businesses had to be controlled by primary producers.

In recent years the FCC has been self-funded and it continues to grow, but throughout its 40 plus year history its mandate has always been to fund primary producers in their agriculture related endeavours. We are today again debating the future of the FCC in Bill C-25.

The bill makes several changes to the Farm Credit Corporation. It makes significant changes in some areas and not so significant changes in others. One of the changes involves changing the name of the corporation from the Farm Credit Corporation to Farm Credit Canada. This is not a name change that is necessary in western Canada where everyone is familiar with the Farm Credit Corporation, but it is being done to give it a stronger name recognition in the province of Quebec. I hope that the expense can be justified when it comes to changing the name.

More substantive changes are being made to the bill than just the name change. I would like to talk about three or four of them today. The first one deals with equity financing. This change is seen as a positive change if it is properly done. If the FCC is to be involved in agriculture lending then it needs to move carefully in this direction.

If members were to take a look at some of the developments in agriculture, particularly in western Canada with hog barns being built and feedlots being proposed and built, they would see a situation where people do not have a lot of collateral to put up for these projects. For the lenders to be involved in that they need to be able to take out an equity position in it.

The bill would allow the FCC to do those kinds of things and then to develop its loan portfolio from there. These are projects that have a higher than average risk factor to them. It gives people an opportunity to get some financing. It also gives lenders an opportunity to cover their own interest.

The second change the bill proposes is to formalize the lease financing arrangement in which the FCC has already taken part. Lease financing allows producers some good possibilities as well. For different reasons, people sometimes do not want to buy their equipment. Lease financing allows them to lease it. Leasing for some is also a tax decision. Leasing gives the producer the choice of service that he wants to take part in. It is a good opportunity for producers and for the FCC. The FCC's lease financing in the past has been shared with other institutions, for example, the CU lease program. This would give lenders the opportunity to protect themselves.

One of the main concerns I have about lease financing is in the area of land and how land is handled by the FCC. It was because of the situation through the 1980s that the FCC found itself holding in excess of one million acres of land at one point and it had to do something with it. Some of the land was leased back to farmers. Over the years the acreage that it was holding has been dropping off, which has been a good thing, but the bill does not address the issue of whether the FCC would be into land leasing in a big way or not. From the evidence, it seems that the FCC is not interested in that. If that is the case, it should be addressed in the bill.

The legislation, in order to be supported, needs to clarify that area. Farmers do not need more competition, particularly from a government funded corporation.

The main change I see in the bill, and the one that is most important, is in the loan eligibility criteria. Up until this point loans that were given out by the FCC had to be given to people who were primary producers or the majority of people involved in the project had to have been primary producers.

Bill C-25 proposes to change that. It would allow lending to ag-related businesses that are not producer controlled or producer owned. The argument for this change is that it would help develop value added businesses. The benefits of this argument are outweighed by some potential problems. I would like to talk about two or three of those problems.

First, and most important, the legislation represents a basic change in FCC policy and philosophy. For 40 years the FCC has had one mandate, which is to provide primary producers with access to credit. This would change from farmer oriented to agribusiness oriented and the focus would shift significantly because of the legislation.

Second, I have a concern over a potential conflict of interest in the legislation. We have seen in the past that other semi-independent government institutions have given us examples of conflict that we do not want to see in the FCC. The most prominent of these and the most obvious has been the Business Development Bank. We have watched and we have been assured that it is business as usual for even the Prime Minister to call these institutions to influence loan decisions.

To this point the FCC has been free of those problems and accusations, as far as I know, and it should stay that way. The legislation brings in a potential conflict of interest problem that the FCC and producers do not need.

The third concern is the possibility of large agribusiness corporations or co-operatives coming to the FCC for financing. We have seen businesses of different sizes getting in trouble. For the first time the bill would allow the FCC to make large loans to large scale businesses. The problem with that is if that does happen it would remove the possibility of financing for smaller operators and for farmers.

I would like to wrap up my comments today with some conclusions. First, the equity financing provision in the bill is a potentially positive addition. It would be an improvement if it were properly and carefully managed. We will be pushing for amendments, however, in a couple of the other areas that I have mentioned, particularly in the area of restricting lease financing to equipment.

Although the FCC did have over a million acres in its portfolio, it has reduced that. Two years ago it had 360,000 acres and last year it dropped off to 120,000 acres. From what we see here, it is trying to get rid of the land. We need an amendment that would ensure the FCC does not find itself in the same situation that it did 10 years ago.

Most important, we need an amendment that would continue to require that active producers are the majority participants in order to be eligible for FCC loans. This runs contrary to what the legislation suggests but, in the interest of primary producers, needs to be maintained.

For 40 years the FCC has been concerned, first and foremost, with primary producers and their agricultural operations. It is essential that remains the focus of the FCC business. The bill leads FCC away from that. The FCC should restrict itself to its historical mandate and work to do a good job in that area rather than trying to spread itself all over the agricultural landscape. Bill C-25 needs some amendments to accomplish that goal.

[Howard Hilstrom, Canadian Alliance, Selkirk—Interlake, MB]

Mr. Speaker, under the bill the leading role of the Farm Credit Corporation would be expanded to allow the corporation to lend to businesses that were not necessarily directly involved in primary agriculture production and did not necessarily have farmers as their majority shareholders. This is the first of three major changes proposed in the amendments being put forward.

The leading role of the Farm Credit Corporation would be expanded to allow the corporation to provide equity financing. This would be accomplished by allowing farm credit to hold non-fixed assets, for example cattle, lend money on that basis and hold the cattle as collateral.

In my time in the Royal Canadian Mounted Police I had quite a bit to do with the federal Bankruptcy Act. There are a whole additional set of problems that come along with holding collateral that is not real estate or real property. This is the area that the Farm Credit Corporation is moving in. It may provide some opportunities but it also provides greater risk.

Bill C-25 would also formalize the Farm Credit Corporation's leasing ability, which could include farm land. One of the things in the bill is that there are no real limits or restrictions on FCC activities. It would allow the FCC to get into a lot of areas that maybe it traditionally was not in and would greatly expand its operations.

The bill would expand the focus of the Farm Credit Corporation beyond its original purpose to provide financial services only to family farms and businesses directly related to primary production. I do not believe it is valid to extend Farm Credit Corporation's involvement beyond farming operations.

In the context of the primary producer, will the farmer benefit? Will the farmer have to compete for the available credit? Will he or she end up in a cross-subsidization situation, where other agriculture businesses would be receiving the FCC funding at the non-primary producer level?

By extending the Farm Credit Corporation's lending abilities beyond primary production, the bill would bring the FCC more directly into competition with private lending institutions and would overlap with government institutions such as the Business Development Bank. We saw the influence that the Prime Minister had with the Business Development Bank in a negative way. We have to be concerned that the Farm Credit Corporation does not go down that same road.

Regarding competition with the banks, the Canadian Imperial Bank of Commerce, for instance, is very active in Selkirk—Interlake. We do not want to see competition from a government lending institution that would have the effect of reducing the ability of private institutions such as our locally owned and run credit unions to continue to be a part of the communities, carry out the funding and lending necessary and actually help stabilize our communities.

The Farm Credit Corporation is run out of Regina. Not every small community has a Farm Credit Corporation in town. That is why I caution about the Farm Credit Corporation getting into competition with banks and credit unions. It would be one area where expansion would create unfair competition or competition that would only be there because of government. This is a good reason to oppose the bill.

Bill C-25 would also formalize Farm Credit Corporation's ability to own or lease land. The FCC stated that this was not the intent of the amendment. It claimed the leasing provisions would be for equipment. However this is not clear in the legislation. It is not appropriate for the federal government to be an owner of Canadian farm land on a long term basis.

Allowing the FCC to permanently hold and lease land could result in the Canadian government's holding influencing the market value of farm land. Allowing the FCC to hold and lease land permanently may also provide the corporation with an incentive not to pursue every possible means to allow farmers experiencing financial difficulties to stay on the land.

I made the point and will come back to it over the next few minutes that the Farm Credit Corporation, like every other crown corporation, has as a portion of its mandate the implementation and carrying out of policy that comes directly out of the creator of the crown corporation, in this case the federal government.

Therefore, the Farm Credit Corporation is an instrument of the federal government. The policies and the dictates of the federal government change with the wind sometimes and sometimes for good reasons. However those changing dictates would have the Farm Credit Corporation carrying out government policy. I am not sure that it is always the best vehicle for government policy to be carried out through a lending institution like the Farm Credit Corporation.

Even under the current legislation, the Farm Credit Corporation has become a significant land holder. In the year 2000 the Farm Credit Corporation owned over 360,000 acres, 95% of which was held in Saskatchewan, the province that has been hardest hit by the farm income crisis

While it is impossible for it to avoid holding land for short periods of time, the act should and could explicitly state that the Farm Credit Corporation should divest of any holdings as quickly as possible. The question of having a time frame in there would also be worthwhile looking at. The price of land is determined by market value and that is established over the course of years. Therefore, a time frame could be included, not necessarily one year but five years, for the government to release its holdings of massive amounts of land for whatever reason would be reasonable.

Bill C-25, also extends the Farm Credit Corporation's lending ability into the area of equity financing. This would be done by allowing it to hold non-fixed assets, as an example cattle, as collateral for these loans. This change would allow the FCC to provide farm financing to primary producers who were not eligible under the current legislation. In many cases this would provide financing that would not be available from private lenders. This is a positive change to the legislation, providing the funding is limited to primary producers.

There are good parts to this bill but there is also some serious concern about the massive expanded role.

The Canadian Alliance policy on this issue states as follow:

We will foster a healthy economic environment for the benefit of consumers by pursuing free and open trade at home and abroad, including the elimination of inter-provincial trade barriers. We will withdraw government from areas of the economy where the private sector could deliver the same services more efficiently and will end the unfair practice of providing subsidies to industries, businesses and special interest groups.

We are not advocating that the Farm Credit Corporation be eliminated or disbanded. We are putting in a caution to ensure that it does not provide unfair competition by getting into an area that is being well-serviced by the private sector.

Bill C-25 takes the primary focus of the Farm Credit Corporation away from providing credit to primary producers. The Canadian Alliance believes that this shift is wrong. Members who appeared before the Standing Committee on Agriculture and Agri-Food said this was not the case and that it would still focus on farmers as primary producers. However we all know that as policies change and the government dictates to the corporation what it is going to be doing, that focus could change. In fact it may no longer be the case that the primary producer is the main beneficiary of the Farm Credit Corporation.

When we speak of credit, I would like to deal for a minute on the present situation in agriculture in western Canada. It is more than credit that is needed there in regard to the overall agricultural farm policy and what can be done for the benefit of farmers. What is required is that the federal government get out of the way of farmers attempting to accomplish their economic objectives.

The minister responsible for the Canadian Wheat Board from Regina has the opportunity to take action with his cabinet and government to move the Canadian Wheat Board along on a voluntary basis to become a marketer for wheat and barley for those farmers who want to have their grain marketed through there. However for those farmers who do not, there should be a choice to market their grain otherwise.

The sole purpose of the Canadian Wheat Board Act is the orderly marketing of wheat and barley according to the various sections contained in the act. It is only incidental if it gets a good price and passes that price back to farmers. That is not its primary objective.

As in the Farm Credit Corporation, what is wrong with free enterprise like the rest of the grains, oilseeds and specialty crops are involved in? What is wrong with free enterprise in the marketing of the personal crops that a farmer grows on his or her farm? This is a major issue. Rather than looking at giving more loans to farmers as the government is saying under the Farm Credit Corporation and cash advance programs, it should be looking at what it could do to lower taxes and change marketing so that farmers can actually increase their incomes themselves.

There is not one other grain, oilseed or specialty crop that is fighting to get underneath the monopoly of the Canadian Wheat Board Act. If that does not tell the minister something then I do not know what does. It is one area that would lower the necessity for credit if farmers were able to increase the income that they could get from wheat and barley that are currently constrained under the Canadian Wheat Board.

At the present time the Canadian Wheat Board regulates all of Canada outside the designated area as to exports and export permits. The costs of these export permits and the administration of them are paid by farmers in the designated area. Money comes out of the pool account for a service that farmers are not getting in Manitoba, Saskatchewan and Alberta, but the service is being provided to farmers in other parts of the country. I am asking the auditor general to look into that. That issue will be coming up in the next few weeks and months in the House.

Even if the cost for the regulation outside the designated area was only one dollar, the real question is: Why should farmers in Manitoba, Saskatchewan and Alberta have to pay even one lousy dollar for a regulation that they receive no benefit from?

Another issue that will be raised over the upcoming weeks, and I am putting the wheat board minister on notice, is why a farmer has to buy back his own grain to export it or, in the case of organic flour producers, to mill it right in Canada? Obviously if Mr. or Mrs. Farmer could get a permit to export the grain or mill their own wheat there is nothing intrinsically wrong or evil in milling flour or exporting wheat.

The only conclusion that I could come to is that the minister responsible for the Canadian Wheat Board wants to keep farmers under the dictatorial powers of the Canadian Wheat Board, which it gets through the federal Government of Canada, by forcing the buyback provisions on to farmers. That way the minister is able to make sure that it is uneconomical for the farmer to have to sell his grain to the Canadian Wheat Board, buy it back and then export it.

We could talk about all the credit we want but there are many things like changes to the Canadian Wheat Board, including things such as getting rid of the four cent federal excise tax on fuel, that would help farmers directly today. The Farm Credit Corporation Act is supposed to be about helping farmers.

In addition, it is very important that all of us in the House of Commons speak out clearly and loudly to say that there are many other things that could be done to help our primary producers. We have to get on with it.

I was interested to hear the minister of agriculture's remarks. We get some of the real intent of why he put these amendments forward. I will mention just a couple of them.

He said in his speech that the corporation would assist a greater number of agriculture enterprises in creating jobs and economic growth in rural Canada. This points out that it is a clear instrument of government policy. The government is looking at somehow using the Farm Credit Corporation to move agriculture beyond the crisis to which the throne speech referred. I do not know whether additional bureaucracy and instructions from the minister would move agriculture beyond crisis. We should free our farmers up so that they would move beyond crisis if the government in some cases just plain gets out of their way.

The minister also said that there was 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. According to the Farm Credit Corporation, it said in committee that it had no plans to be involved in any transition project. The Farm Credit Corporation is supposed to be a self-funding institution. As a result, the question of whether or not the taxpayer would be exposed to a much greater risk is one that would have to be dealt with.

[Howard Hilstrom, Canadian Alliance, Selkirk—Interlake, MB]

Mr. Speaker, today we are debating Bill C-25, an act to amend the Farm Credit Corporation Act and to make consequential amendments to other acts. The first amendment is to change the Farm Credit Corporation of Canada to Farm Credit Canada, both acronyms being FCC.

In 1994 the Farm Credit Corporation had a $3.5 billion loan portfolio. Information from its director given to us the other day in the Standing Committee on Agriculture and Agri-Food was that the portfolio is now in the neighbourhood of $6.8 billion.

There is an obvious need in Canada for the Farm Credit Corporation. The Canadian Alliance Party generally supports it. However the debate today is about amendments to the act that would create this credit corporation in Canada. The vote is about the amendments and not whether Canada should have a Farm Credit Corporation.

The Farm Credit Corporation has a role to play. The question is how big a role should that be? Government lending institutions in competition with private and other government lending institutions, like the Business Development Corporation, is a big question. Is the Farm Credit Corporation the appropriate vehicle for carrying out government policy? Another big question which needs to be answered in this debate is whether it will remain focused on the primary producer? This is a big concern because the original purpose of the Farm Credit Corporation was to ensure that Canada had, as part of its insurance, a viable agriculture sector with the ability to produce food in this country for both domestic consumption and export.

I would ask at this time, Mr. Speaker, for the consent of the House to share my time with the member for Cypress Hills—Grasslands.

[Lyle Vanclief, Liberal, Minister of Agriculture and Agri-Food]

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.

Business Of The House

[Don Boudria, Liberal, Leader of the Government in the House of Commons]

Mr. Speaker, let me begin by congratulating the opposition House leader on his appointment and to extend as well similar words of congratulation both to his seatmate, the new chief whip, and the other officials of his caucus.

This afternoon we will continue debate on the second reading of Bill C-6, the water export bill. I intend to seek adjournment of the debate after the speech from our colleague from the Bloc Quebecois on this matter.

If there is any time, we will commence the second reading of Bill C-25, the farm credit amendments bill. It would be my intention as well to adjourn the debate after the lead off speech from either the government minister or parliamentary secretary, as the case may be. We would then propose to move immediately to private members' business this afternoon.

Friday we will debate second reading of Bill C-26, the tobacco tax legislation.

On Monday we will return to Bill C-6, which will not be completed this afternoon. We will then continue with Bill C-25 for the same reason, and then, if necessary, to Bill C-26, the tobacco tax legislation, if we do not complete it tomorrow. If we have any time left, it will be spent on Bill C-10, the marine parks bill, as I previously indicated to my colleagues at the House leaders meeting earlier this week. In the afternoon we will debate Bill C-16, the charities bill. I wish to give notice pursuant to Standing Order 73(1) that the government will propose that this bill will be referred to committee before second reading. This should, in essence, take roughly the time between 3.00 p.m. and the adjournment later in the afternoon.

Tuesday shall be an allotted day. In the evening it is my intention to seek the usual co-operation to hold the second of the take note debates on the modernization of House rules. It would be pursuant to consultation with others. My intention is to see if we want to have this debate using the forum we used very successfully earlier this week, but, as I said, I intend to consult with other House leaders on that.

On Wednesday I would propose that we continue with any unfinished business from the previous days, adding thereto Bill S-16 which was introduced in the House earlier this day. Should we be ready to do so, and should time permit, I would then commence the report stage and third reading of Bill C-22, the income tax amendments bill.

Farm Credit Corporation Act

[Lyle Vanclief, Liberal, Minister of Agriculture and Agri-Food]

moved for leave to introduce Bill C-25, an act to amend the Farm Credit Corporation Act and to make consequential amendments to other acts.

(Motions deemed adopted, bill read the first time and printed)