Mr. Speaker, it gives me pleasure today to address this very important bill, Bill C-75, an act to amend the Farm Improvement Marketing Co-operatives Loan Act. This act facilitates credit on farm improvements for processing and distribution and marketing of farm products. I am sure we can all agree the bill is very important to the agricultural sector.
The program has been quite a success, giving many farms and marketing co-operatives a hand in improving or starting new operations. In the year 1994-95, FIMCLA, as the program is called, was used to facilitate more than 17,000 loans totalling some $475 million. The average loan size in 1994-95 was $27,000 and the five-year average is $22,000.
It has been very advantageous to the agricultural group in Souris-Moose Mountain. My riding is concerned about the impact of recent GATT agreements and the World Trade Organization on the day to day lives and operations of our farmers.
It is very important to take a look at some of the restrictions farmers in our area may face now that we have to make our grain forwarding and other export practices acceptable to world markets. To improve our opportunities we have to turn to value added products.
I will tell the House about a group of people in my riding who have embraced this idea. A group of six farm families in Souris-Moose Mountain have formed a co-operative to begin a joint venture with a Holland firm to establish a nucleus hog breeding farm in Saskatchewan. It will be the first entry of continental European hogs into Canada in 37 years.
With the assistance of the loan through FIMCLA the co-operative farm has been formed. The joint venture is positioned to address the new opportunities brought about by the World Trade
Organization. The venture pioneers the process of the co-operative approach to improving the hog industry in Saskatchewan.
Farm members will be provided with superior animals that will increase the productive capacity of their existing operations and improve the profitability of their hog operations. The co-operative will be the first to introduce the Dalland hog to North America. As well it will be the first artificial insemination facility for hog semen in western Canada.
The co-operative will create spinoff employment and stabilize the incomes of farm members. Those in the Kipling area appreciated the opportunity to become partners with the agricultural sector in making sure the program moved forward.
For example, the distribution of semen and the marketing of breeding animals require transportation. The needs of transportation will enhance the use of one farm member's existing trucking equipment, creating additional returns for him. The co-operative will require production, management and clerical personnel that will be supplied by farm families to enhance their farm incomes and to improve individual farm returns.
The co-operative will be more than a primary producer of farm products. As a group they will market a product of high value to the benefit of their members. Their natural geographic advantage and lower cost of production make their product competitive in the North American market. This venture pioneers an innovative process of efficiently distributing new genetics to the North American hog industry and is very important to my riding.
None of this would have been possible if FIMCLA had not been there to guarantee the loans to meet their needs and to meet their new ideas, the new and better ways of doing things. With due diligence and proper assessment techniques, FIMCLA guarantees do not have to carry a high amount of risk. The past record shows that. Over the last 25 years net losses under the act have approximated 1 per cent of total loans guaranteed. In the terrible years during the 1980s when interest rates were high, low farm income and land devaluation caused more defaults than usual. The program is an excellent one. This is why the current legislation is required. It is a safe and inexpensive way for the government to help farmers help themselves in changing times.
As I drive around my riding talking with people I realize these sincere, bright, hard working individuals have hundreds of good ideas. Given a start, they could go far on their own. We need only to open the door for them.
Furthermore, the amendment includes measures to offset the natural extra expenses that would come with an increase in the cap. The amount of offsetting needed is small. For example, an increase of only one-quarter of 1 per cent in the registration fee would sufficiently offset the extra costs and maintain the current level of liability for at least five years. For an average loan of $27,000 it would be $64.
By not proceeding with the suggested amendment, lenders would have to stop and discontinue programs once the cap reached $1.5 billion. It would be irresponsible. Can we imagine saying no to the co-operatives in Saskatchewan I just mentioned? Can we imagine telling them that we understand the project will stabilize income, create employment and enhance Canada's exports but that some arbitrary cap says they cannot continue?
That we must increase the cap is positive. It means the program is doing well. More people are finding out about its successes and are deciding to use it. It makes possible what once seemed impossible for them.
With sustained lower interest rates and the improved farm debt situation approximately 600 new designated lenders and better marketing of the program have contributed to the success of FIMCLA. In simple terms, the aggregate limit can be increased at little or no cost to government and should satisfy program demand for the next 10 years.
This positive measure is supported by the agri-food sector and commercial lenders alike. The program has become increasingly important to rural lenders such as credit unions that offer credit to farm producers. The Canadian Bankers Association and Credit Union Central in Saskatchewan support the proposed increase. The Canadian Federation of Agriculture and other major farm groups have been consulted and support the proposed amendment. It is inexpensive and supports the agri-food sector.
Taxpayers are well served. Improvements made under the program contribute to the strength of Canada's economy and decrease dependency on government subsidies.
I ask members to support Bill C-75. By increasing the aggregate principal amount of loans that can be guaranteed, the program will continue to be offered to farmers and co-operatives and will make a difference.