Any substantive changes in this Legislative Summary that have been made since the preceding issue are indicated in bold print.
The Farm Improvement and Marketing Cooperatives Loans Act (FIMCLA) has been in place since 1987 to make loans accessible to farmers and farming cooperatives. However, beginning farmers, intergenerational farmers and certain cooperatives were excluded under the FIMCLA. Faced with the recent economic crisis which, among other things, has limited access to credit, these groups have been confronted with even more challenges regarding the management of their farming operations.
Bill C-29 was introduced in the House of Commons on 4 May 2009 by the Minister of Agriculture and Agri-Food (“the Minister”), the Honourable Gerry Ritz. It moved relatively quickly through the House of Commons (4–26 May) and the Senate (27 May–16 June), received Royal Assent on 18 June 2009, and came into force immediately. The bill amends the FIMCLA and repeals the Farm Improvement Loans Act (FILA), which is no longer active, having been effectively replaced by the FIMCLA in 1987.
The bill’s amendments to the FIMCLA extend the availability of loans to farmers who were previously not eligible. Unlike the previous situation, a beginning farmer – meaning a farmer who “intends to be or has been engaged in farming in Canada for less than six years” (clause 9(a)) – is now eligible for loans. Also now eligible are agricultural cooperatives with a majority (50% + 1) of farmer members. (Previously, only agricultural cooperatives with 100% farmer members were eligible.) The amendments also support intergenerational farm transfers. According to Prime Minister Stephen Harper, facilitating the transfer of farms to younger generations is becoming increasingly important since some 84,000 farmers are expected to retire in the next 15 years.(1)
The short title of the amended legislation is the Canadian Agricultural Loans Act (CALA), which better reflects the purpose of the loan program. It is estimated that this new program will guarantee $1 billion in loans over the next five years.(2)
Bill C-29 significantly increases loan limits, to reflect inflation and the expanding needs of farmers. The increased loan limits and eligibility are also designed to better align the CALA with the Canada Small Business Financing Act. Previously set at $250,000, the limit is now increased to an aggregate of up to $500,000 for any one farmer, with the limit for cooperatives staying steady at $3 million. These loan limits may be replaced by regulation or may be increased subject to approval by the Minister. The eligible loan rate remains at 80%, although the rate for beginning farmers is now 90%, with both rates subject to regulation.
Prior to Bill C-29, the Minister of Agriculture and Agri-Food was liable to lenders for up to 95% of the value of loans. Under the amended legislation, the Minister’s liability may be reduced by regulation, still within the 95% maximum amount prescribed by the bill. Such regulation was not provided for under the FIMCLA, but is made possible under the CALA in order to provide flexibility based on the varying needs of farmers.
Notably, the bill also provides for a five-year review of the Act. Moreover, Agriculture and Agri-Food Canada intends to develop an electronic system for loan applications, in order to reduce processing times.(3)
Both the long and short titles of the legislation are replaced. Clause 2 renames the Act as the Canadian Agricultural Loans Act.
Clause 3 replaces two of the definitions set out in section 2, and amends a third. It effectively broadens the previous definitions of farmer, farm products marketing cooperative, and lender. Previously, the definition of “farmer” included only those “engaged in farming in Canada.” Bill C-29 expands that definition to include those that are engaged “or [intend] to be engaged in farming in Canada.” No criteria are provided for determining who has the intention “to be engaged in farming.”
Further, the criteria for inclusion in the definition of “farm products marketing cooperative” are relaxed under the amendments, making it easier for a cooperative to become eligible for loans under the Act. Previously, every member of a farm products marketing cooperative had to be a farmer for the cooperative to be eligible for a loan. The amended definition requires only that the cooperative association have “a majority of 50 per cent plus one of members or shareholders that are farmers.”
Lastly, clause 3 adds a new section 2(e) to expand the definition of “lender” to further include any other organization that applies to be designated as a lender and is so designated by the Minister with the approval of the Minister of Finance.
Clause 4 replaces the heading of section 4 of the Act, describing guaranteed farm loans.
Clause 5 replaces part of section 4(1), which addresses the types of activities that are eligible for lenders’ losses. This clause provides that the Minister may be liable for 95% of the eligible loss, or less than 95% if a different percentage is provided for by regulation. (Section 4(1) of the FIMCLA was not subject to regulation and fixed the Minister’s liability at 95%.)
The amendments include a provision permitting regulations governing the eligibility of losses related to livestock purchases under section 4(1)(c). Previously, losses on livestock purchases were included without being subject to regulations.
Further, clause 5(3) replaces section 4(1)(g), which deals with payment of lenders’ losses for loans made regarding the purchase of land. Previously, section 4(1)(g) provided that the Minister was liable for 95% of lenders’ losses for “the purchase of additional land.” Clause 5(3) expands liability for “the purchase of land” to include any land used in the farming operation. Previously, loans were not available under the program for transfers of farmland within families. Clause 5 amends this by adding sections 4(1)(g.1), 4(1)(g.2) and 4(1)(g.3). Under the amendment, loans can be acquired for the purchase of shares in a corporation, interest in a partnership, or a share or membership in a cooperative. However, these types of loans are eligible only if at least 90% of the assets involved are used principally in the course of carrying on the business of farming in Canada.
Clause 5 also replaces section 4(2) concerning certain exclusions regarding loans related to private dwellings. Previously, loans were excluded if they are used to finance “improvements to a private dwelling.” The new section also excludes loans for the purpose of financing the “construction of … a private dwelling.”
Clause 5 replaces section 4(3)(b), which prescribed that applications for loans with respect to property must disclose the type of interest that the farmer holds in the property. The amended section indicates that regulations may specify the type of interest or right that the farmer must hold or intend to hold. If such regulations have been put in place, clause 5 requires that the particular interest or right be stated on the loan application.
Lastly, clause 5 also replaces section 4(3)(c), which sets a limit on the amount of money that may be loaned to individual farmers and protected under the program. Previously, under 4(3)(c), payment of lenders’ losses was conditional on whether the aggregate of the principal amount together with other amounts under this Act and the Farm Improvements Loans Act did not exceed $250,000. Clause 5 breaks section 4(3)(c) into two parts: 4(3)(c)(i) limits repayment of the lender’s loss to $500,000 if the loan was made for any of the purposes listed in section 4(1), while 4(3)(c)(ii) lowers that limit to $350,000 if those purposes did not include the purchase of land or the construction, repair or modification of buildings or structures.
Clause 6 replaces section 5(1) of the Act, which determines how the principal is divided when there are two or more borrowers. This amendment reflects the new limits provided in the Act. Previously, section 5(1) provided that where the principal does not exceed $250,000, each farmer’s principal would be determined by dividing the principal by the number of borrowers. Bill C-29 removes the specified limit of $250,000 but maintains that in the case of two or more farmers as joint borrowers, each will have an interest “equal to the amount obtained by dividing the principal amount of the loan by the number of farmers.”
Under the FIMCLA, the Minister might be liable for 95% of farming cooperatives’ losses. Clause 7 amends section 6(1) to allow for regulation of this liability: 95% remains the maximum, but regulations may prescribe a lower amount.
Further, clause 7 amends section 6(2)(b) of the Act to reflect the change in definition of “farm products marketing cooperative.” Previously, section 6(2)(b) provided that the application must state that all members of the cooperative are farmers. Bill C-29 strikes that definition, and provides that the application must state that “50 per cent plus one of the members or shareholders … of the farm products marketing cooperative are farmers.”
In addition, clause 7 amends section 6(2)(c), which addresses the loan amount available to cooperatives. A new maximum aggregate loan limit is specified in 6(2)(c)(i), which increases the limit from $250,000 for a cooperative to $500,000. If the loan is for machinery, or for refinancing the debts of the cooperative, section 6(2)(c)(ii) provides that the aggregate loan limit is $350,000. The limits set out in both 6(2)(c)(i) and (ii) may be regulated, which expands the scope of the previous provisions. Alternatively, upon application by a lender, the Minister may increase the limits, although the Minister’s discretion is limited to $3 million in section 6(3).
Lastly, clause 7 provides that the aggregate loan limit for a cooperative is $3 million, as under previous section 6(3), but adds that this limit may be varied by regulation.
Clause 8 amends section 7, which limited the maximum amount of the Minister’s liability to all lenders to $3 billion. The amendment provides that another limit may be fixed by regulation as the maximum.
Clause 9 replaces section 9, which limits the Minister’s liability for appraised asset values and differentiates between beginning/intergenerational farmers and other farmers. Previously, section 9 provided that the Minister was not liable for any portion of a loss that exceeded 80% of the appraised value on the day the loan was made, and did not address whether any other amount might be set by regulation. Under clause 9, the eligible loan rate remains the same for existing farmers at 80%; however, Bill C-29 raises the eligible loan rate to 90% of the appraised value for beginning and intergenerational farmers. The amendments also set out that the Minister may be liable for losses reflecting a different percentage of value if a different percentage is set by regulation, so long as it does not exceed 80% for existing farmers and 90% for beginning/intergenerational farmers.
Additionally, clause 9 effectively deletes section 10 of the Act, which set a prescribed proportion limiting liability for loans over $100,000.
Clause 10 replaces section 13, which limits the Minister’s liability for losses covering legal fees. The amendment gives the Minister discretion regarding liability for legal fees under the Act. Previously, the Minister was liable for legal fees if the “fees, costs or disbursements are assessed and allowed by the Deputy Minister of Justice.” Bill C-29 makes the Minister of Agriculture and Agri-Food liable for legal fees, costs or disbursements incurred by the lender “in accordance with the rates established by the Minister in consultation with the Minister of Justice.”
Clause 11 makes three additions to section 15(1)(b). New section 15(1)(b.1) allows the regulation-making authority to specify the purpose for which livestock is kept or the minimum amount of time livestock must be kept under the program, in order to be eligible for a loan guarantee under section 4(1)(c). New sections 15(1)(b.2) and (b.3) allow for the promulgation of regulations fixing various percentages and proportions relevant to the functioning of the legislation.
Further, clause 11 allows the Governor in Council a broader power to regulate. Previously, the Governor in Council could make regulations requiring lenders to provide periodic reports to the Minister in respect of the loans they make. Clause 11 extends regulatory authority to include making regulations “prescribing the information to be furnished to the Minister.” Further, clause 11 creates a new power allowing the Governor in Council to regulate “the time when the information is to be furnished.” Lastly, clause 11 repeals section 15(2) of the Act, which gave authority to the Governor in Council to change the Minister’s liability limit for payment on a loan to a lower limit as recommended by the Minister and the Minister of Finance.
Clause 12 replaces section 22 of the Act. Previously, this section required that an annual report be made with respect to the administration of both the FIMCLA and the FILA. Clause 12 requires only that a report be made with respect to this Act and not the FILA, since the latter is repealed by Bill C-29 Clause 12 also removes the now unnecessary language in section 22(2), which deals with the first annual report of 1988 and how it should be prepared.
A new section 22.1 is added by clause 12, which provides for mandatory review of the CALA program every five years. Similar to the annual report required under section 22, the report on the review is to be laid before each House of Parliament, but “on any of the first 30 days on which that House is sitting after the report is completed,” whereas the annual report is still to be provided “on any of the first 15 days on which that House is sitting” after the report is completed.
Clause 13 makes consequential amendments to the Bank Act. First, it removes a reference to qualifying loans under the FILA to any aquaculturist under section 427(1)(m)(v). Second, it replaces sections 427(1)(n)(v) and (vi), which state that loans may be made to any farmer as under the FILA and the FIMCLA, with a section indicating that banks may lend to a farmer for “any purpose for which a loan as defined in the Canadian Agricultural Loans Act may be made” to reflect the new title of the Act.
Clause 14 repeals the Farm Improvement Loans Act.
Bill C-29 was not contentious. It was supported by many agricultural associations and farming groups across Canada, which endorsed the bill’s purpose of helping provide both beginning and existing farmers and cooperatives with the credit they need in order to operate. Greg Marshall, President of the Agricultural Producers Association of Saskatchewan, said “It’s a very positive thing to see this money put into this loan program and if it’s expanded to include new farmers and inter-generational transfers, that’s exactly what we’re looking for.”(4) However, some members of the Standing Committee on Agriculture and Agri-Food raised the issue of which stakeholders, and to what extent, had been consulted for the preparation of the bill. Agriculture and Agri-Food Canada officials provided a list of those consulted, which is attached to this document as an appendix.
| Name | Organization |
|---|---|
| Michele Aasgard | Alberta Community and Co-operative Association |
| Humphrey Banack | Wild Rose Agriculture Producers |
| Casey Bydevaate | Potato Growers of Alberta |
| T.M. (Teresa) Clouston | ATB Financial |
| Ed Kinzel | Credit Union of Alberta |
| Dale Kuly | Agriculture Financial Service Corporation |
| Eillen McElroy | Western Stock Grower’s Association |
| Jeff Nielsen | Western Barley Growers Association |
| John Polegi | RBC Royal Bank of Canada |
| Ross Purdy | BMO Bank of Montreal |
| Don Thompson | Cooptions Consulting Coop Ltd. |
| Ken Vincent | Director of Cooperatives – Alberta |
| Henry Wierenga | Alberta Chain Co-op |
| Name | Organization |
|---|---|
| John Ardiel | The Bay Growers’ Co-operative Inc. |
| Jason Bent | Ontario Federation of Agriculture |
| Fitz Bharath | Ontario Soybean Growers |
| Heather Blanchard | Brier Run Alpacas – Edy’s Mills Fine Fibres |
| Ron Bonnett | Ontario Federation of Agriculture |
| Michael Bouk | AG Energy Co-operative |
| Norma Collett | Newfoundland and Labrador Livestock Producer’s Council |
| Alison Connell | BMO Bank of Montreal |
| Sante P. DeCarolis | CSEA Inc. (Canadian Sweet Potato Ethanol Alliance) |
| John Gillespie | Ontario Cattlemen’s Association |
| Jim Grey | Ontario Soybean Growers |
| Ann Gulliver | ACC Farmer’s Financial |
| Denyse Guy | Ontario Co-operative Association |
| Darren Hannah | Canadian Bankers Association |
| Matthew Holden | TD Canada Trust |
| Brian M. Hughes | ACC Farmer’s Financial |
| Larry Huszczo | CSEA Inc. (Canadian Sweet Potato Ethanol Alliance) |
| Frank Kennes | St. Willibrord – The Credit Union |
| Don Ledrew | ACC Farmer’s Financial |
| Ryder Lee | Canadian Cattlemen’s Association |
| Angela Yee Loong | Royal Bank Financial Group |
| Norris McAuslan | Brier Run Alpacas – Edy’s Mills Fine Fibres |
| Vicky Malcom | The Ontario Flue-Cured Tobacco Growers’ Marketing Board |
| Lynne Markell | Canadian Co-operative Association |
| Jeffery Mitchell | Canada Mink Breeders Association |
| Berry W. Murray | CSEA Inc. (Canadian Sweet Potato Ethanol Alliance) |
| Bob Norris | Ontario Federation of Agriculture |
| Kirk Rankin | Canada Mink Breeders Association |
| Helmuth Spreitzer | Ontario Pork |
| Paul A. Stewart | CIBC Mortgages & Lending |
| Lisa Thompson | Ontario Dairy Goat Co-operative |
| John Van Alten | Ontario Beekeepers’ Association |
| Beth Wismer | Indian Agricultural Program of Ontario |
| Name | Organization |
|---|---|
| Yvan Beaudin | National Bank of Canada |
| Pierre Beaudoin | Royal Bank of Canada |
| Amrane Boumghar | Agriculture and Agri-Food Canada |
| Gilles Bourget | Ministère de l’Agriculture, des Pêcheries et de l’Alimentation |
| Félix Bussières | Union des cultivateurs franco-ontariens |
| Marjolaine Carrier | Desjardins Fédération des caisses du Québec |
| Michel Clément | Ministère du Développement économique, de l’Innovation et de l’Exportation |
| Sylvie Cloutier | Conseil de la transformation agroalimentaire et des produits de consommation [Council Food Processing and Consumer Products] |
| Robert Gratton | Co-opérative Agricole D’Embrun |
| Donald Hains | Laurentian Bank |
| Ivan Hale | Quebec Farmers’ Association |
| André Jalbert | Fédération des Coopératives de Développement Régional du Québec |
| Sylvain Martel | Nutrinor, Coopérative agro-alimentaire du Saguenay Lac-St-Jean |
| Bruno Montour | Conseil de la coopération du Québec |
| Myriam Parent | Desjardins Fédération des caisses du Québec |
| Josée Robitaille | Ministère de l’Agriculture, des Pêcheries et de l’Alimentation |
| Yvan Roy | Qualiporc Regroupement Coopératif |
| Harley Trudeau | Government of Yukon |
| Virginie Simard | La Financère agricole du Québec |
| Paul-André Vallières | National Bank of Canada |
| Name | Organization |
|---|---|
| Bruce Andrews | Atlantic Beef Products |
| Ian Blenkham | Chicken Farmers of Nova Scotia |
| Hans Bouma | Dairy Farmers of New Brunswick |
| Charline Cormier | Chicken Farmers of Nova Scotia |
| Mark Davies | Nova Scotia Turkey Producers |
| Michael Delaney | P.E.I. Grain Elevators Corporation |
| Melvin Doiron | Coopérative de développement régional – Acadie |
| Frank Foster | Nova Scotia Federation of Agriculture |
| Claire Gagnon | Registraire des coopératives, Ministère de la Justice |
| Shelly Higgins | Porc NB Pork |
| Donna M. Langille | Nova Scotia Federation of Agriculture |
| Jennifer MacDonald | Chicken Farmers of Nova Scotia |
| Jonathan McClelland | Nova Scotia Co-operative Council |
| John Murray | Nova Scotia Farm Loan Board |
| Mike Nabuurs | Prince Edward Island Federation of Agriculture (PEIFA) |
| Laurence Nason | Nova Scotia Federation of Agriculture |
| Fred Pierce | Nova Scotia Co-operative Council |
| Janice Tait | RBC Royal Bank of Canada |
| Henry Vissers | Pork Nova Scotia |
| Name | Organization |
|---|---|
| Virginia Coupal | Western Canadian Marketers & Processors |
| Jason Dean | Saskatchewan Cattle Feeders Association |
| Lanny Dewan | RBC Royal Bank of Canada |
| Judie Dyck | Saskatchewan Canola Growers Association |
| Laurel Feltin | Saskatchewan Association of Rural Municipalities |
| Lyle Frick | Credit Union Central of Saskatchewan |
| Dennis Fuglerud | Saskatchewan Stockergrowers Assocation |
| Jim Graham | Saskatchewan Agriculture, Food and Rural Revitalization |
| Shawn Hermanson | Saskatchewan Agriculture and Food |
| Tim Highmoor | Saskatchewan Cattle Feeders Association |
| Kerry Holderness | Agricultural Producers Association of Saskatchewan |
| Sylvain Lejeune | Conseil de la coopération de la Saskatchewan |
| Caroline Maze | Saskatchewan Indian Equity Foundation Inc. |
| Jim Parsons | Great West Beef & Bison Inc. |
| Don Ross | Western Farm Leadership Co-operative |
| Clem Samson | Farm Credit Canada |
| Kim Sanderson | University of Saskatchewan, Specialized Livestock Market Research Group |
| Pam Skotnitsky | Credit Union Central of Saskatchewan |
| Glen Snyder | BMO Bank of Montreal |
| Lorne Tangjerd | Saskatchewan Agriculture, Food and Rural Revitalization |
| Veronica Wollmann | Credit Union Central of Saskatchewan |
| Name | Organization |
|---|---|
| Andrea Bourne | Agri-Adapt Council Inc. |
| Harry Burden | Dairy Farmers of Newfoundland and Labrador |
| Roger Churchill | Department of Innovation, Trade & Development |
| Norma Collett | Newfoundland and Labrador Livestock Producer’s Council |
| Jason Collins | Egg Producers of Newfoundland and Labrador |
| Dwight Eveleigh | Newfoundland and Labrador Horticulture Producers Council |
| Brian Goldsworthy | Agriculture and Agri-Food Canada |
| Michelle Lester | Provincial Farm Women’s Association |
| Glen Fitzpatrick | Newfoundland and Labrador Federation of Co-operatives |
| Lynn Kendall | Department of Forest Resources |
| Cynthia MacDonald | Department of Forest Resources and Agrifoods |
| Mark MacPherson | Government of Newfoundland and Labrador |
| Tony Marx | Newfoundland and Labrador Federation of Agriculture |
| Gordon McKenna | Farm Association Producer |
| Cle Newhook | Axis Consulting |
| Dave Oliver | Producer |
| Daxton Pinsent | Department of Innovation, Trade & Development |
| Frank Pye | Lake Melville Agricultural Association |
| Melvin Rideout | Newfoundland and Labrador Horticulture Producers Council |
| Gillian Skinner | Department of Innovation, Trade & Development |
| Winston Stanley | Newfoundland and Labrador Horticulture Producers Council |
| Karl Tee | Atlantic Canada Opportunities Agency |
| Ron Walsh | Sheep Producers Association of Newfoundland and Labrador |
| Ann Marie Whelan | Newfoundland and Labrador Horticulture Producers Council |
| Chan Wiseman | Newfoundland and Labrador Young Farmers |
| Mervin Wiseman | Newfoundland and Labrador Federation of Agriculture |
| Name | Organization |
|---|---|
| Rick Buchanan | Credit Union Central of British Columbia |
| Joy Emmanuel | BC Institute for Co-operative Studies |
| Diane Fillmore | BC Ministry of Agriculture & Lands |
| Kerry Froese | B.C. Chicken Grower’s Association |
| Martin J. Frost | PWC DevCo, The Co-operative Consultants |
| Trevor Kempthorne | First Nations Agricultural Lending Association |
| Glen Lucas | B.C. Fruit Growers’ Association |
| Renee Umezuki | Agriculture and Agri-Food Canada (Regional Office) |
| Bob Richards | RBC Royal Bank of Canada |
| Stephen Thomson | B.C. Agriculture Council |
| Name | Organization |
|---|---|
| R. Peter Blawat | Manitoba Agriculture, Food and Rural Initiatives |
| Scott Clayton | Manitoba Agricultural Services Corp. |
| Alvin Depauw | Keystone Agricultural Producers |
| Tom Dooley | Aikins, MacAulay & Thorvaldson LLP |
| Joy Dornian | Souris & Glenwood Community Development Corporation |
| Wendy Friesen | Manitoba Pork Council |
| Vera Goussaert | Manitoba Cooperative Association Inc. |
| David Kerr | Manitoba Agriculture, Food and Rural Initiatives |
| Marnie Kostur | Parkland Agricultural Resource Cooperative |
| Cam McIntosh | RBC Royal Bank of Canada |
| Dale Myhre | Tribal Wi-chi-way-win Capital Corporation |
| Gil Nelson | Granny’s Poultry Co-operative Ltd. |
| Hugh Stephenson | Producer |
| Bill Swan | Dairy Farmers of Manitoba |
| Louis Tétrault | Conseil de développement économique des municipalités bilingues du Manitoba |
| Ed Thomas | The Canadian Wheat Board |
| Name | Organization |
|---|---|
| Albert Daoust | Agriculture and Agri-Food Canada |
| Bruce Langevin | Agriculture and Agri-Food Canada |
| Michel Massé | Agriculture and Agri-Food Canada |
| Rémi Massé | Agriculture and Agri-Food Canada |
| Rhiannen Putt | Agriculture and Agri-Food Canada |
| Alain Roy | Agriculture and Agri-Food Canada |
| Donna Seymour | Agriculture and Agri-Food Canada |
| Bob Shalla | Agriculture and Agri-Food Canada |
| Karine Tardif | Agriculture and Agri-Food Canada |
| Raymond Whelan | Agriculture and Agri-Food Canada |
* Notice: For clarity of exposition, the legislative proposals set out in the bill described in this Legislative Summary are stated as if they had already been adopted or were in force. It is important to note, however, that bills may be amended during their consideration by the House of Commons and Senate, and have no force or effect unless and until they are passed by both houses of Parliament, receive Royal Assent, and come into force. [ Return to text ]
** Please note that not all the listed Agriculture and Agri-Food Canada representatives were present at each session.
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