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