Farm Credit Canada’s recent outreach to specific agrifood sectors hit by unusual environmental conditions has now extended to those hit by the broader “economic environment.”
The federal ag lender on Tuesday said it will offer an unsecured credit line of up to $500,000 with loan processing fees waived, “to help producers, agribusinesses and agri-food operations with their immediate cash flow needs.”
FCC said it’s making the offer to both new and existing customers who are “experiencing financial difficulties, including cash flow challenges, due to higher-than-average input costs and elevated interest rates.”
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While the Bank of Canada has maintained its policy rate since January, FCC warned in a March outlook that “additional intervention” could still be required to get inflation to two per cent.
Elevated inflation and interest rates are expected to slow consumer spending and business investments, FCC said in March, adding that if the U.S. Federal Reserve continues raising its policy rate, that could lead to a lower Canadian dollar if the Bank of Canada extends its pause.
A global economic slowdown has also resulted in lower growth in Canadian ag and food export volume, FCC said at the time.
Cost pressures in the “current economic environment” are difficult to pass on, FCC said Tuesday, and that’s led to “tough financial circumstances for some operations.”
“While the current experiences of individual operations within the different agriculture and food sectors are varied, we hope those who identify with these challenges will use this credit line as an opportunity to work through their current position and build back stronger than before,” FCC chief operating officer Sophie Perreault said in a release.
FCC reiterated it can offer flexibility to customers who are going through “challenging business cycles and unpredictable circumstances” on a case-by-case basis, such as through flexible payment options, payment deferrals or credit lines.
For example, the lender said last Thursday it would consider additional short-term credit options, deferral of principal payments and/or other loan payment schedule amendments for customers in B.C.’s wine sector up against financial hardship following “prolonged cold temperatures” last winter that caused significant damage to wine grapevines.
FCC said May 16 it would also consider similar supports for maple syrup producers in Eastern Canada following an “unfavourable change in temperature this spring” that shortened the maple syrup harvest in most parts of the region.
“This limited harvest can cause financial challenges for farm operations – not to mention personal hardship and stress,” Manon Duguay, FCC’s vice-president of operations for Quebec and Atlantic Canada, said in a separate release at the time.
“We stand by our customers over the long term, helping them pursue opportunities and overcome challenges, and this year’s unfavourable temperature has certainly been challenging for many maple syrup business owners.” — Glacier FarmMedia Network
