In­crease in loan guar­an­tee limit for pro­duc­ers, dou­ble edged sword says MLA

The Drumheller Mail - - FRONT PAGE - Pa­trick Ko­lafa The Drumheller Mail

The province's move to in­crease the provin­cial loan guar­an­tees pro­gram for live­stock pro­duc­ers could have good or bad con­se­quences, says MLA Rick Strankman.

Last week the gov­ern­ment an­nounced it would be in­creas­ing the provin­cial loan guar­an­tee from $55 to $100 mil­lion for cat­tle and sheep pro­duc­ers buy­ing and feed-

ing live­stock for mar­ket. Ac­cord­ing to a re­lease, the Feeder As­so­ci­a­tion Loan Guar­an­tee Pro­gram sup­ports lo­cal, pro

ducer- run co-op­er­a­tives in ob­tain­ing com­pet­i­tive fi­nanc­ing. This in­crease will im­prove pro­ducer's ac­cess to cap­i­tal so they can grow their busi­nesses and meet the de­mands of to­day's mar­ket­place.

“The cat­tle and live­stock in­dus­tries are key driv­ers in Al­berta's ru­ral econ­omy, and feeder as­so­ci­a­tions are vi­tal to the suc­cess of the in­dus­try. This is the re­sult of the pro­duc­tive dis­cus­sions we have had with the in­dus­try. We are lis­ten­ing and mak­ing thought­ful changes to sup­port pro­duc­ers,” said Oneil Car­lier, Min­is­ter of Agri­cul­ture and Forestry.

Agri­cul­ture and Forestry critic Strankman, says it asks some fun­da­men­tal ques­tions about the role of gov­ern­ment.

“I think it is a dou­ble edged sword,” he said. “It is good that there is the op­por­tu­nity for those or­ga­ni­za­tions to be busi-

ness rel­a­tive, but just ex­actly how is the gov­ern­ment in­volved in it? It may cause some to ques­tion the gov­ern­ment's in­volve­ment and there­fore in­flu­ence on the mar­ket.”

He says to his knowl­edge he does not re­call any de­faults in these pro­grams so typ­i­cally they are fairly worry free.

“It is the po­ten­tial op­tics of gov­ern­ment in­volve­ment in the fi­nance in­dus­try,” he said.

Ac­cord­ing to a re­lease, feeder as­so­ci­a­tion mem­bers use the guar­an­tee to se­cure cap­i­tal from lend­ing in­sti­tu­tions to buy beef calves and sheep to be fed for a num­ber of months be­fore be­ing sold at mar­ket.

The pro­gram has been highly suc­cess­ful for 80 years. A larger loan guar­an­tee is needed to re­flect cur­rent cat­tle prices and greater de­mand for feeder cat­tle and to en­sure that el­i­gi­ble pro­duc­ers have ac­cess to the pro­gram.

Strankman adds that in light of mar­ket con­di­tions, the pro­gram may see more use.

“Now this year with the price of cat­tle sup­pos­edly go­ing to be down, by about 25 per cent, they will be able to buy that many more cat­tle on the old lim­its, and now with the new ex­tended limit, it will re­ally in­crease the vol­umes for some pro­duc­ers… should those risk lev­els be born by a gov­ern­ment agency?” he said.

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The Al­berta gov­ern­ment has in­creased the Feeder As­so­ci­a­tion Loan Guar­an­tee Pro­gram for pro­duc­ers to se­cure cap­i­tal from lend­ing in­sti­tu­tions to buy beef and sheep to be fed be­fore be­ing sold to mar­ket.

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