Mr. Speaker, I am happy to speak in favour of amendments to the Farm Improvement and Marketing Co-Operatives Loans Act.
As has been stated previously, we are seeking to amend the act in order to increase the aggregate principal amount of loans allowed under the act from $1.5 to $3 billion. The program has proved very popular with farmers. In fact, I have had considerable experience with the use of the farm loans act in my own farm operation.
Consequently, as a result of this demand the present five year $1.5 billion cap has almost been reached. The Farm Improvement and Marketing Co-Operatives Loans Act is one of the best accepted programs in existence by the farm community. As is seen, it is used substantially.
FIMCLA is a loan guarantee program designed to increase the availability of credit on reasonable terms to farmers and farmer owned marketing co-operatives. It allows investments in new technology and equipment and covers a wide range of farm improvement projects.
I would throw a note of caution that we have to be careful here and not just make guarantees for the banks. There is a commitment by the lending community here and there has to be a commitment to the farm community as well. We do not want to see the situation where the banks just use this program when they really do not need to use it to have a guarantee on the funds they are lending out. The objective then must be to put more capital into the system to assist farmers who otherwise might have difficulty in acquiring loans to get them from the lending community.
The improvements the moneys can be used for include the purchase of farm machinery, clearing land, installing irrigation or drainage systems, fences, construction or renovation of farm buildings and the purchase of livestock or farmland. The loans can also be used by co-operative associations for investing in value added production. This could include facilities for processing, distributing or marketing farm products such as washing or packaging plants. We have had a considerable amount of that kind of operation in my riding in terms of the potato industry.
As well the loans can be used for alternate farming enterprises such as organic production. That is an extremely important point. Here is a production base that I think has a tremendous and an increasing potential. There is very definitely a niche market in terms of organic products and it will be increasingly so in the future.
Sometimes it is very difficult for people in the organic production industry to get loans in the normal course of events. Extending the amount of money under the act should make it possible for those people in the organic production industry to acquire the necessary funds to meet their needs.
It is important to note that the environmental impacts of the projects are considered. Environmental impact assessments are commonly used on the larger projects.
Through the program, farmers get better interest rates than those normally available, usually .5 to 1 per cent below the prevailing rate. They are also allowed to borrow with a minimum equity of 20 per cent. This is extremely important especially to younger farmers getting into the industry or some of the higher risk farming operations.
The act also facilitates access to credit in rural areas, putting investment power into the hands of producers and marketing co-operatives. It strengthens production and financial stability in rural Canada.
FIMCLA supports adaptation and diversification. It encourages rural development and sparks job creation. The program has become increasingly important to rural lenders such as credit unions and Caisses populaires that offer credit to farm producers. The Canadian Bankers Association, the Credit Union Central in Saskatchewan and la Confédération des caisses populaires Desjardins all support the proposed increase. The Canadian Federation of Agriculture and other major groups have also been consulted and support the proposed amendment.
The program has been an inexpensive way for the government to support primary producers and the downstream industries. Historically the net loss in terms of lending under this program has only been 1 per cent. Any extra costs incurred under the new act will be offset by an increase in the registration fee paid by the producers and marketing co-operatives that benefit from the program. Taxpayers are very well served. Improvements made under the program contribute to the strength of Canada's economy and decrease dependency on government subsidies.
In conclusion, I ask members to support Bill C-75 by increasing the aggregate principal amount of loans which can be guaranteed. The program will continue to be offered to farmers and farmer owned marketing co-operatives. In so doing, we will be supporting one of the major wealth producing industries in this country. We will be ensuring that primary producers, where all the wealth generates from in terms of the farm production base, have the availability of capital under reasonable terms so that they can be the kind of wealth generating industry which so many other industries spin their wealth from.