Thank you, Mr. Chair.
Good morning, honourable members. It's a pleasure to appear before the standing committee on behalf of Farm Credit Canada. My name is Greg Stewart, and I am the president and CEO of FCC. With me today is Lyndon Carlson, our senior vice-president of marketing.
FCC is a financially self-sustaining crown corporation. We provide financial and business services to Canadian agriculture and agrifood. This year, we are celebrating our 50th anniversary. Our corporate office is in Regina, and we have over 100 offices, most of them located in rural Canada, and we have about 1,500 employees. We provide customers with flexible, competitively priced financing, equity, insurance, management software, information, and learning. Our innovative products and services are tailored to the unique needs of agriculture.
In the past year, we made over 18,000 loans and nearly 25% of those loans were to new customers. We focus on the primary producer as well as suppliers and processors along the full value chain.
We know from our customers that one of the most important factors that determine the future success of a producer or agribusiness operator is their management capability. We received positive feedback on our FCC learning programs. Over the past two years, we've had over 25,000 people attend an FCC learning event. The FCC portfolio has grown for each of the last 16 consecutive years and now stands at the $17 billion mark. FCC profits are reinvested to develop more loans and services to benefit agriculture and agrifood.
Agriculture is an incredibly diverse industry. Some sectors are doing very well despite the global economic situation, while others, as we know, are struggling. Eight to ten months ago, there was concern about the availability of credit. We continue to see very strong competition for higher-quality, supply-managed, and larger loans; and for the most part, the predictions regarding tighter credit have not materialized. Canadian financial institutions have done a good job of ensuring that credit is available to Canadian producers and agribusiness operators. FCC customers were able to access credit in all sectors and all parts of the country, as evidenced by our lending results.
Our portfolio continues to grow. It grew 14% in 2008-09 and net disbursements reached $5.1 billion. Our portfolio has increased in every sector except hogs. Primary production is our core business and that represents 88% of our portfolio. The remaining 12% is agribusiness and agrifood lending.
We know that many farms will be transferred to the next generation in the next five years and new farmers are entering the industry. In 2008-09, FCC disbursed nearly $1.6 billion to young farmers, those under the age of 40. That represents more than 30% of total net disbursements in the past year. This new generation of producers is innovative, technologically advanced, and willing to try new things. They are the future of agriculture. Recognizing that interest and enthusiasm for agriculture starts early, FCC supports young farmers at every stage, from up-and-coming farmers in 4-H clubs and college students to products and services tailored to meet the needs of first-time borrowers.
ln the 2007 federal budget, the government decided to consolidate more of its borrowing. They mandated that some crowns, including FCC, borrow through the consolidated revenue fund. Our goal is not to be the lowest or the highest priced lender, but to be competitive and to provide a fair alternative to farmers and agribusiness operators. Our strategy is not to undercut competitors to win business, but it is to be competitive. We believe our customers value our innovative products, knowledge of agriculture, and our customer service.
FCC is supporting agriculture and lending in all sectors. At the same time, we pay close attention to the business plans of the customers and businesses we lend to. Before FCC lends money, a thorough assessment is conducted. We take into account the risk associated with the loan, and the ability to repay. FCC arrears have been low for several years. Currently, approximately one quarter of one per cent of principal not due is in arrears, slightly lower than last year. Our customers are committed to following through on their loan repayment agreements even in challenging times, and when they can't make payments, we offer our customer support program to help them make it through.
I certainly can't predict the future of Canadian agriculture, but there is optimism out there. In January 2009, we released the results of FCC research with our Vision panel. This is a group of 9,000 producers and agribusiness operators across Canada who share their opinions with us. The survey showed optimism in spite of the current economic situation. More than half of the 4,300 respondents said that they are optimistic about the future of agriculture, up 1% from the previous year. At the time of the survey, nearly one-quarter of respondents planned on expanding their operation in the next five years, and two-thirds believed that their business was in better shape than it was five years ago. This, for us, was very positive news.
But it's not all rosy. There certainly are challenges. Producers have experienced volatile commodity and input prices, and that is likely to continue. The Canadian dollar has been strengthening, impacting those businesses that rely on the export market. In addition, in 2009, the World Bank expects global trade to decline for the first time in over 25 years.
On the other hand, interest rates are low, and the average value of Canadian farmland increased 5.6% during the last six months of 2008. This is the third-highest increase since 1997. As a result, the asset base of producers has increased in value.
For 2009-10, we see optimism regarding growth, and margins are projected to improve in the crops, dairy, and poultry sectors, despite continued increases in production costs. Hog and beef producers will continue to be challenged, with prices below the five-year average and input costs above the five-year average. As this committee well knows, the recent COOL legislation is another challenge facing these sectors.
In closing, it is only when our customers succeed that FCC succeeds. We are very fortunate that 50,000 customers have chosen to do business with FCC, including nearly 4,000 new customers last year. Our financial strength allows us to invest in initiatives that enhance the ability of Canadian producers and agribusiness operators to compete globally.
Thank you very much for your time and attention. Lyndon and I would be pleased to answer your questions.