Evidence of meeting #25 for Agriculture and Agri-Food in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was banks.
A recording is available from Parliament.
11:50 a.m.
Conservative
June 9th, 2009 / 11:50 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Thank you very much to all of you for being here.
I'd like to come back to this question, but I have another question that has been flagged by some small businesses in my riding. I'm wondering if you could reply in regard to small agribusinesses that you folks may deal with.
It's about the whole problem or the whole perception that the banks will be applying to get into the Interac business. Also, I believe Interac has made an application to charge higher fees. Apparently, now it's only 5¢ a transaction, but if they're allowed to do this by the Competition Bureau, they will then be allowed to charge percentage fees. Also, the banks, it's my understanding, want to get into the Interac business.
This could have a hugely devastating effect on those small businesses in our small communities, whether they're car dealerships or supermarkets or are selling agricultural instruments. Have you received any feedback on this out there in the communities? Do you have any position on what I've just stated? Would you just like to comment? I'd like to throw that open to anybody who would like to comment.
Maybe, Mr. Wrobel, you could start first.
11:50 a.m.
Director, Market and Regulatory Developments, Canadian Bankers Association
Thank you, Mr. Chairman.
The CBA appeared before a joint session of the House finance committee and industry committee on precisely this issue and brought some members with them to discuss our position on that. I think what we said there is reflective of the CBA's and the industry's position.
We came here to talk about agriculture. My members here have experience and expertise in agriculture. This is not something that we feel we can comment on as individuals; we sort of brought the wrong people. If you really want to know what the banking industry's position is, I would suggest that members look to the testimony before that joint session.
11:50 a.m.
NDP
11:50 a.m.
Associate Vice-President, Government Affairs, Credit Union Central of Canada
I would be in the same position. I wouldn't be able to make knowledgeable comments on the situation.
11:50 a.m.
A witness
We'd be pleased to provide you with our previous brief on this.
11:50 a.m.
NDP
11:50 a.m.
President and Chief Executive Officer, Farm Credit Canada
We don't do any of that business.
11:50 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Just so I understand this correctly--even though this isn't the purpose of this meeting--you don't have a position or an opinion in regard to the possible devastating effect on small businesses in our agriculture communities.
11:50 a.m.
Associate Vice-President, Government Affairs, Credit Union Central of Canada
If I could just paraphrase the question so I understand, I don't think I have the information you're looking for, but it's small agribusinesses that probably use Interac as a payment method, and there's some potential that the pricing could be increasing, so that's going to have an impact on small agribusinesses. That's the essence of it. I can't even comment on what our submission is.
11:50 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Okay. I just wanted to flag that to see if you had any comments.
In regard to the question Ms. Skotnitsky raised, you haven't said much on that, Mr. Wrobel, in regard to Farm Credit versus the banks and the credit unions. Could you comment on that, please?
11:50 a.m.
Director, Market and Regulatory Developments, Canadian Bankers Association
Well, I indicated that we have these general principles that we think should guide crown financials' behaviour in the marketplace. For example, there should be a well-defined public policy mandate and they should provide incremental financing. They should provide niche financing. If there are gaps in the financial marketplace, we believe that crowns should be there.
Government has a variety of instruments by which it tries to extend additional credit to the marketplace. It now has the CALA loans. It has the Canada Small Business Financing Act, BDC, and FCC. We support those kinds of initiatives if they are done within well-defined public policy parameters and complement what the private sector is already doing.
If FCC behaves within that framework, we support the activities of FCC. Now, I think in all of their initiatives, in all of their deals, we have members who have some issues with some of the things they are doing. Perhaps some of my members would like to talk to that—Dave Rinneard from BMO—but I think generally, if there's a well-defined framework, we are supportive.
11:55 a.m.
David Rinneard National Manager, Agriculture, BMO, Canadian Bankers Association
Thank you, Mr. Chair.
With respect to Farm Credit Canada, as of the last few years we certainly view them as a competitor. What's increasingly transpiring is that we, as financial institutions, are becoming more or less the complementary lender as opposed to the one that was initially complemented. It's as though the void that was initially there is no longer the case and is being filled by the federal government as opposed to being filled by the private sector. We'd certainly prefer things to revert to how they were and to have FCC fill the void in instances of the kind Marion alluded to, filling in when we're simply unable to or when there is incremental risk that we no longer can embrace.
11:55 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Would you have a comment on that, Mr. Stewart?
11:55 a.m.
President and Chief Executive Officer, Farm Credit Canada
Sure.
Our mandate is to be a self-sustaining crown corporation, so we no longer only take on deals that the banks or credit unions are not interested in. That was done many years ago, and as I mentioned before, we went bankrupt. Our mandate is to be competitive.
I would say that gaps exist in the industry. Our 50,000 clients are perceiving some kind of gap, because they're dealing with us. We are in every market in Canada, for every size of producer, and in every industry. Our largest growth comes in difficult times, and this past year is no exception. Our clients and other clients perceive a backing away of interest in agriculture during tough times. One of the reasons we were created and one of the reasons we are around is to ensure that there is a lender out there willing to support family farms in every marketplace and in every sector, not only during the good times, when everybody would like to be involved in agriculture, but also during the difficult times, and that is what we do.
11:55 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
Basically, in regard to financing, you're in the same kind of--
11:55 a.m.
Conservative
The Chair Conservative Larry Miller
Mr. Atamanenko, your time has actually expired. If you have a closing comment, I'll allow it.
11:55 a.m.
NDP
Alex Atamanenko NDP British Columbia Southern Interior, BC
It's just a quick question. You're in the same kind of situation as Canada Post, in other words: you have to be self-sufficient--
11:55 a.m.
Conservative
11:55 a.m.
Conservative
Randy Hoback Conservative Prince Albert, SK
Thank you, Chair.
Thank you, gentlemen, for coming today. I know you're all very busy. June is a busy time of year for everybody in the agriculture sector, so we appreciate your making the effort to come here.
I've a couple of areas that I want go to. One is wholesale financing and the other is competition, which we're talking about in general. I'll start off with the competition side of it.
I want to say credit unions have been the backbone of Saskatchewan. You guys have done a heck of a job. One thing we really appreciate about credit unions is the ability to go and talk to somebody face to face and have a decision made face to face.
The one concern I have with credit unions right now is the ratios that some of these smaller branches have in these smaller communities. They don't have the mortgages or the credit cards or the other areas of business to keep that credit union on a good financial footing. How are you addressing that issue?
11:55 a.m.
Associate Vice-President, Government Affairs, Credit Union Central of Canada
The system is addressing that issue through the regionalization that you're seeing. Merger and amalgamation activity is happening across Canada through partnerships among credit unions that are coming together in regional centres. The branch network is still being supported, so we still have those face-to-face individuals across the desk, but we have fewer credit unions. I'll use Saskatchewan numbers because I'm most familiar with them. When I started with the credit union system 20 years ago, we had 330 individual credit unions; we're down to 65.
That's how they're getting at that. They get together and diversify their operation to spread out the risk so that they can continue to be in agriculture. That's the solution we have been using.