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

This bill was last introduced in the 37th Parliament, 1st Session, which ended in September 2002.

Sponsor

Lyle Vanclief  Liberal

Status

This bill has received Royal Assent and is now law.

Elsewhere

All sorts of information on this bill is available at LEGISinfo, provided by the Library of Parliament. You can also read the full text of the bill.

Message From The SenateThe Royal Assent

June 14th, 2001 / 5 p.m.
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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 ActGovernment Orders

June 11th, 2001 / 6:30 p.m.
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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 HouseRoutine Proceedings

June 8th, 2001 / 12:05 p.m.
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Glengarry—Prescott—Russell Ontario

Liberal

Don Boudria LiberalLeader 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 ActGovernment Orders

June 8th, 2001 / 10:50 a.m.
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Progressive Conservative

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.

Farm Credit Corporation ActGovernment Orders

June 8th, 2001 / 10:45 a.m.
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Canadian Alliance

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.

Farm Credit Corporation ActGovernment Orders

June 8th, 2001 / 10:35 a.m.
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NDP

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.

Farm Credit Corporation ActGovernment Orders

June 8th, 2001 / 10:10 a.m.
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Canadian Alliance

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.

Farm Credit Corporation ActGovernment Orders

June 8th, 2001 / 10:05 a.m.
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Hastings—Frontenac—Lennox And Addington Ontario

Liberal

Larry McCormick LiberalParliamentary 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.

Farm Credit Corporation ActGovernment Orders

June 8th, 2001 / 10:05 a.m.
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West Nova Nova Scotia

Liberal

Robert Thibault Liberalfor 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.

Farm Credit Corporation ActGovernment Orders

June 7th, 2001 / 5:55 p.m.
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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 HouseOral Question Period

June 7th, 2001 / 3:05 p.m.
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Glengarry—Prescott—Russell Ontario

Liberal

Don Boudria LiberalLeader 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 ActGovernment Orders

June 7th, 2001 / 1:25 p.m.
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Canadian Alliance

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.

Farm Credit Corporation ActGovernment Orders

June 7th, 2001 / 1:20 p.m.
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Canadian Alliance

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.

Farm Credit Corporation ActGovernment Orders

June 7th, 2001 / 1:15 p.m.
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Hastings—Frontenac—Lennox And Addington Ontario

Liberal

Larry McCormick LiberalParliamentary 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.

Farm Credit Corporation ActGovernment Orders

June 7th, 2001 / 12:45 p.m.
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Bloc

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.