Agriculture and Agri-Food Canada

Agriculture and Agri-Food Canada

May 04, 2009 19:39 ET

Proposed Improvements to Loans Act Will Give Farmers Better Access to Credit

OTTAWA, ONTARIO--(Marketwire - May 4, 2009) - Canadian farmers who are finding it difficult to obtain loans due to the tightening of global credit markets can count on the Government of Canada. Today, Agriculture Minister Gerry Ritz introduced new legislation to guarantee an estimated $1 billion in loans over the next five years to Canadian farm families and cooperatives, most of which will go to farmers and cooperatives who were previously ineligible.

"Canada's farmers have always made such an important contribution, both to our society and our economy," said Minister Ritz. "That is why we continue to work hard to ensure farming remains a viable career choice. These amendments will give new farmers, more agricultural co-operatives, and farmers taking over the family farm, easier access to credit to establish and improve farms."

On Friday, Prime Minister Stephen Harper followed up on his commitment in Canada's Economic Action Plan by announcing the introduction of legislation that would expand the scope of the Farm Improvement and Marketing Cooperative Loans Act.

The proposed amendments would ensure that:

- Farmers would be eligible for new loan guarantee limits of up to $500,000, which doubles the current limit of $250,000.

- New farmers would be eligible for loans under the Canadian Agricultural Loans Act (CALA). Currently they are not eligible under the FIMCLA.

- Agricultural co-operatives with a majority farmer membership (50% + 1 farmer members) would be eligible for loans of up to $3 million for the processing, marketing or distribution of farm products. Loans are currently limited to co-operatives owned 100% by farm members.

- Loans of up to $500,000 would be available to help inter-generational farmers taking over their family farm. These loans are currently not available under the FIMCLA.

- The name of FIMCLA would be changed to CALA to reflect its new focus.

To ensure the new program remains responsive to producers' needs, a full review of the program will be done in five years.

The FIMCLA program remains in place while the amended Act goes through Parliament.

BACKGROUNDER

Amendments to the Farm Improvement and Marketing Cooperatives Loans Act (FIMCLA)

Amendments are being proposed to the Farm Improvement and Marketing Cooperatives Loans Act (FIMCLA). With the new loan guarantee program:

- Farmers would be eligible for new loan limits of up to $500,000 for the purchase of real property and $350,000 for all other loan purposes.

- New farmers and producers taking over their family farm would be eligible for loans. They are not currently eligible under FIMCLA.

- Agricultural co-operatives, including now the ones with a majority (50% +1) of farmer members would be eligible for loans of up to $3 million for the processing, distribution or marketing of farm products.

- A new on-line system would improve the delivery of the program.

- The name of the act would be changed to the Canadian Agricultural Loans Act (CALA).

Amendments to improve the program are based on the results of national consultations with farmers, co-operatives and financial institutions during 2006.

In Canada's Economic Action Plan, the federal government made a commitment to expand the FIMCLA to support the renewal of the agricultural sector workforce and enable co-operatives to better seize market opportunities.

The FIMCLA program remains available to producers until the new CALA program is fully up and running.

What is FIMCLA?

The FIMCLA program is a federal guaranteed loans program designed to make loans more readily available to producers and co-operatives. The program encourages investment in areas such as new machinery, livestock, buildings and technology.

Loans are available through financial institutions. Current maximum loan amounts are $250,000 per individual producer or $3 million for co-operatives.

For more information on the FIMCLA call toll free at 1-888-346-2511 or visit the website at www.agr.gc.ca/fimcla.

Contact Information

  • Agriculture and Agri-Food Canada
    Ottawa, Ontario
    Media Relations
    613-759-7972
    1-866-345-7972
    or
    The Office of the Honourable Gerry Ritzx
    Meagan Murdoch
    Press Secretary
    613-759-1059