Mr. Speaker, I listened to the comments from the previous speaker. We have gone off in a different direction with respect to the bill before us right now, the bill dealing with the Farm Credit Corporation. However I will touch on that other direction just for a moment.
As members are well aware, I am the Progressive Conservative Party critic for agriculture. I have obviously had a lot of dealings not only with members on this side but with members on the government side as well as producers. In my constituency, agriculture is the backbone of our economy and therefore I deal with this issue on a daily basis.
As for the dollars that were earmarked for the agricultural economy, dollars that were to go back to producers, the $500 million, different provinces are providing those dollars in different fashions. In Manitoba we call it CMAP 2, the second program. With provincial and federal contributions, it will come to about $92 million. That has been capped at about $11,000 for each producer. To the member for Toronto—Danforth, $11,000 might sound like an awful lot. However, currently it is costing the average producer somewhere in the neighbourhood of $120,000 to $150,000 to put a crop in the ground. Input costs such as those for fertilizer, gas and pesticides are included. Therefore the $11,000 is not a substantial amount of money.
The member for Sackville—Musquodoboit Valley—Eastern Shore was right when he indicated that there was an additional requirement for $400 million. That would have brought it up to what we consider to be a reasonable limit of $900 million at that time.
I do not want to get into a debate, but every member on that side of the House stood and voted against an additional $400 million. It was not a non-confidence motion. It was just not meant to be. The amount of dollars that were necessary at the time were not forthcoming.
For producers who will receive their portion of the $500 million, it is not sufficient to keep most of them on the land, on the farms this year. A long term well thought out safety net policy is necessary and must come forward, a policy that would allow farmers some glimmer of hope they can produce crops that pay a fair price for a commodity and that they can continue farming not only in their lifetimes but hopefully into the lifetimes of their children and their grandchildren.
We are here not only to talk about agriculture but a component of agriculture, the Farm Credit Corporation. As we have seen in the debate, agriculture has changed over the last number of years. It has changed effectively from last year. The Farm Credit Corporation has to maintain its ability to compete in that world of change in agriculture.
The Farm Credit Corporation was created on October 5, 1959 by the Diefenbaker Conservative government when the Farm Credit Act was proclaimed into Canadian law to provide a consistent source of lending services that farmers could rely on through all economic cycles. At that time the corporation was mandated to provide one product at a fixed rate, that is first mortgage loans to farmers to a maximum $20,000.
I mention that because we have come a long way from 1959 to today, and the Farm Credit Corporation has to move with that change within the agricultural industry.
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 FCC loans. Loan limits increased to $150,000 in 1975. In 1982 amendments to the act led to the introduction of more loan products and the FCC made its debut on the 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 agricultural sector. The FCC could now offer products such as financing to purchase or improve farmland and buildings, buying personal property for farming purposes and consolidating debts. It enabled the corporation to support value added production by providing financing for diversified enterprises on or off the farm.
The act has helped bring the FCC in sync with the changing marketplace. The Farm Credit Corporation loan portfolio has grown from $3.4 billion in 1993 when the act was introduced to $6 billion today. At present the crown corporation serves 44,000 customers with 900 employees in 100 offices across Canada.
The Farm Credit Corporation is a good corporate citizen. It is there for a purpose. Back in 1959 the purpose was identified, the need was identified and the Farm Credit Corporation was born. It is a good crown corporation that provides a very valuable service to many farm customers across the country.
It is a bank. Let us make no mistake about that. I can go out and find people anywhere who do not like dealing with banks of any sort.
Sometimes people who borrow money do not like paying it back and therefore the bank is at fault. The FCC is a good bank. It does its business properly. It puts money into the agricultural sector. It gets the money back from producers and puts it back into the sector again. It is self-sufficient and self-supporting.
Last year the FCC put record amounts of dollars back into the farm economy. A record amount of $1.7 billion was lent to agriculture producers. We recognize that there are some difficulties in the farm economy right now. Why is it that banks are lending a record amount of $1.7 billion? Is most of it rewriting old notes and old loans? The answer I was given was no.
About $200 million of it was rewriting old notes, but $1.5 billion was new money going back to people to expand their farm operations, to put in different types of operations, agriculture operating practices and value added processing units. It is good money and good business.
The bank must expand its abilities to be able to compete in a world where agriculture needs new and innovative measures and programs. It has done that since 1959 when it started with a maximum $20,000 mortgage loan at one rate. It has gone the whole gambit now. The act would allow the Farm Credit Corporation to put forward new products to producers that would help them continue their operations.
The Progressive Conservative government improved the way FCC was managed. We brought in the FCC equity building plan in 1990 to allow farmers to extend their leases and buy back land once they were on firmer financial ground.
The Progressive Conservatives moved the head office of FCC to Regina so that it could be closer to those who it serviced the most, namely the majority of customers in Saskatchewan, Manitoba and Alberta.
We passed a bill to expand the role of FCC allowing it to make loans to farmers who wanted to diversify their operations. The bank was able to and allowed to put more dollars into the pockets of farmers who wanted to diversify their operations and become better at what they did.
There are a number of components in Bill C-25 that I would like to speak to and in some cases I wish to question. In every legislation one wants to hear from the people whom it will affect. We also want to hear the ups and downs or the pros and cons of amendments to the bill.
I would like to mention another point. The president of the FCC appeared before the agriculture committee last week. I stood in the House about a week ago on a piece of private member's business and suggested having crown corporations including the Canadian Wheat Board open to access to information guidelines.
Members of the government argued against me quite vehemently. They suggested it was my backdoor way of trying to get at the Canadian Wheat Board, which in fact it was not. It was simply a matter of trying to have transparency and accountability in a crown corporation.
The FCC is a crown corporation. I asked the president if the FCC was eligible under the Access to Information Act and he said that it was. I can file an access to information request with respect to the FCC and I would then have access to that information.
I asked the president if it was a real deterrent in a very competitive business like banking. He explained to us that it was not the case, that he did have the ability under the act to withhold some very sensitive information that would be a detriment to the competitiveness of the business, but he said in general terms that having to deal under the Access to Information Act was not an impediment to its operation. I say to the government side that here is one crown corporation, which is in a very competitive business with banks, credit unions and other financial lending institutions, that can work under those circumstances and still have access to information available in its crown corporation.
The bill is a step in the right direction. The PC Party will be supporting reference of the bill to committee after second reading. We look forward to asking specific questions of stakeholders who will come before the committee to give their impressions of the legislation.
The first thing the bill would do is change the name from Farm Credit Corporation, the name which I grew up with and know very well, to Farm Credit Canada. There is not much differentiation between Farm Credit Canada and the Farm Credit Corporation.
We all recognize FCC as a federal institution. I am told that the only reason this is to happen is so that more credit can be given to the federal government. When customers go to farm credit Canada as a crown corporation, they will recognize it as a Canadian federal institution as opposed to a provincial institution.
To me there is much in a name. Perhaps there are reasons that can be explained to me as to why this is absolutely necessary. I would also like to know what the costs are in changing the name from Farm Credit Corporation to Farm Credit Canada. Changes in the letterhead, operating tools, all the documents and required legal changes in a name change may well have a huge cost associated with them. Perhaps it would be better to use those dollars to give producers a lesser rate, or perhaps even more support systems to producers, than simply to change the name. We would have to debate that.
The mandate of the FCC would be expanded from financial services to farming operations and businesses related to farming, to business services and products to such enterprises. That in itself is broadening the mandate of the FCC, of which our party approves.
Farming is changing quite dramatically. In my constituency alone the majority of the economy is either directly or indirectly related to agriculture. We have often said that we cannot simply sell the raw material at the farm gate and expect an income generated that would allow people to stay on the farm. We have to value add. We have to add to the product. We have to make sure that those businesses are set up to take a raw material and make it into something more than just simply a bushel of wheat or a bushel of barley going some place else.
That means a number of opportunities. In my area in particular we have a state of the art hog processing plant which means that more raw material must be produced. That raw material requires a lot of investment in hog farms, cattle operations and chicken farms. The FCC must have the ability to be able to finance those types of operations to allow for diversification in the agricultural community.
Beyond that, looking into the production services and processing services of other businesses can now go forward. We have around my area an isoboard plant that produces strawboard. FCC should, does and would have the ability to fund those operations so that straw taken from agricultural production could go into the production of another commodity that has value.
The FCC should also have the ability to do equity deals, another opportunity in expansion of the services that it would be able to provide.
The FCC would have the authority to provide loans to businesses related to farming in both cases where the business is majority owned by farmers and where it is not. Currently it has to be owned by farmers. Now it can go outside those guidelines, outside the box, and allow dollars to go to loans given to corporations which do not have any direct farmer impact. That is good as it expands the services available from the FCC.
The FCC would be given authority to incorporate, amalgamate and dissolve subsidiaries. It would be able to provide lease financing for assets to be used in a farming operation or a business related to farming. This again is a change in the FCC mandate where there could be lease financing for assets. This would allow operations to free up cashflows to go into the operation or expansion of their businesses.
The FCC 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. A provision would be made for the appointment of an acting president and an acting chairperson where necessary. This is just good business.
As I mentioned earlier, the FCC is a well run and self-sufficient corporation. It has $6 billion outstanding in loans, but it must get with the program of today's 21st century operations of business.
There are potential questions and criticisms. I mentioned the name change and the cost. The bill has the potential to unnecessarily compete directly with credit unions and banks. The purpose of the FCC is to provide loans to farmers and not to equipment dealers and wheat pools.
I say that we must question this, not necessarily disagree with it. It must expand its opportunities to compete. Competition in the banking industry is not so terrible, and neither is competition in grain marketing. Banks and credit unions can compete effectively with the FCC. I do not believe the rules have unfair advantages for the FCC and I am sure banking institutions see it the same way.
Although the bill expands the lending powers of the FCC, farmers do not need more debt. That is one of my concerns. Extending more credit to farmers is perhaps not the best thing for farmers who already have substantial debt. Unfortunately banking institutions too often are more the problem than the solution. Where there is equity in the land moneys will be given to farmers, and that is not necessarily the best thing. However I have faith in the FCC to know what is best for it, for its customers and for the industry.
We have not heard a lot from other members, stakeholders or industry groups, but that is what the committee is all about. Perhaps when witnesses appear we will have a chance to examine the bill more thoroughly and get their input into what is good or bad about the legislation.
On behalf of the Progressive Conservative Party we will be supporting this piece of legislation. I agree in all sincerity with the mandate of the Farm Credit Corporation. It does an exceptional job, considering that it is a bank and that people have as much respect for bankers as they do for politicians. However as a banking facility it does, in my opinion, provide the services that are needed in the agricultural community.
I look forward to coming back to the House after committee and perhaps putting forth amendments. I certainly look forward to coming back at third reading and suggesting that some of the stakeholders proposed good changes to what I consider a good piece of legislation.