Minister Announces Extension To The Farm Improvement And Marketing Cooperatives Loan Act (March 30, 2005)

REGINA, Saskatchewan, March 29, 2005 - Agriculture and Agri-Food Minister Andy Mitchell confirmed that the Government of Canada will continue to support applications under the Farm Improvement and Marketing Cooperative Loan Act (FIMCLA).


The extension was announced in conjunction with the $1 billion in immediate federal assistance for cash-strapped Canadian farmers facing record low farm incomes. It is being provided as a transition measure to allow farmers and lenders to explore other lending alternatives while farmers deal with these unprecedented cash flow pressures. The Government of Canada is also committed to examining other lending alternatives and it is anticipated that such a review will be completed by March 31, 2006.


The loan guarantee program was included in the Government expenditure review process in the March 2005 budget as a result of a steady decline in the number of loans registered through the program over the past ten years.


“Declining loan registration indicates that the program requires modernization and it is the Government’s intention to design an instrument that can be adapted to better meet today’s situation, ” said Minister Mitchell. “Throughout the next year, I will examine how a program such as FIMCLA could address identifiable debt-access gaps especially those related to new farmers, who are not eligible under the existing program.”


The FIMCLA program was designed to increase the availability of loans for the purpose of the improvement and development of farms and the processing and distribution of farm products by cooperative associations. The program is delivered by financial institutions across the country.


Over the past ten years, FIMCLA loans have been predominantly used for the purchase of implements, additional land and livestock. The majority of loans (52%) have been to farmers in the grains and oilseeds sector, while the beef sector has used the second largest number of loans (29%).


A recent review of the program confirmed a reduced demand for the program nationally, with producers accessing their capital requirements from lending institutions without the government guarantee.


Existing loans will continue to be guaranteed by the government until the end of their terms.