March 20, 1956

LIB

Maurice Bourget (Parliamentary Assistant to the Minister of Public Works)

Liberal

Mr. Maurice Bourget (Parliamentary Assistant to the Minister of Public Works):

This question was handed to me a few minutes ago by the Minister of Finance, and I have made inquiries in our department. I am told that no official representation has been made to the Department of Public Works.

Topic:   HIGHWAYS
Subtopic:   TORONTO
Sub-subtopic:   REQUEST FOR ASSISTANCE IN BUILDING TRAFFIC TUNNEL
Permalink
PC

Daniel Roland Michener

Progressive Conservative

Mr. Michener:

May I ask a supplementary question? Can the parliamentary assistant advise whether a similar request has been made of any department?

Topic:   HIGHWAYS
Subtopic:   TORONTO
Sub-subtopic:   REQUEST FOR ASSISTANCE IN BUILDING TRAFFIC TUNNEL
Permalink
LIB

Louis Stephen St-Laurent (Prime Minister; President of the Privy Council)

Liberal

Righi Hon. L. S. St. Laurent (Prime Minister):

Is not that the type of question, Mr. Speaker, that should go on the order paper so that inquiries in all departments could be made for the purpose of giving an answer?

Topic:   HIGHWAYS
Subtopic:   TORONTO
Sub-subtopic:   REQUEST FOR ASSISTANCE IN BUILDING TRAFFIC TUNNEL
Permalink
PC

Daniel Roland Michener

Progressive Conservative

Mr. Michener:

Mr. Speaker, I would be glad to have it on the order paper. It is just a matter of getting information.

Topic:   HIGHWAYS
Subtopic:   TORONTO
Sub-subtopic:   REQUEST FOR ASSISTANCE IN BUILDING TRAFFIC TUNNEL
Permalink

CANADIAN FARM LOAN ACT

AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.


The house resumed, from Thursday, March 8, consideration of the motion of Mr. Harris for the second reading of Bill No. 84, to amend the Canadian Farm Loan Act.


PC

Lewis Elston Cardiff

Progressive Conservative

Mr. L. E. Cardiff (Huron):

I intend to take just a very few minutes to speak on this bill. I think the farm loan board could more popularly be called dominion farm loans limited, because it is so difficult to get a loan on some of these farms. In my part of the country we have a lot of young farmers who would stay on the farm if they could get started, but they find it very difficult to get a loan, especially from the dominion government, to enable them to start.

I am going to have something to say about the percentage rate that is being charged but that is not the hold-up. It is the fact that these people just cannot get a loan because the restrictions are too great, and there is not enough flexibility on the part of those administering the loans. I do not know why this should be so. At 5 per cent the rate is too high. There is no reason why these loans should not be made by the dominion government just as cheaply as the junior farm loan board of Ontario makes them. That farm loan board is doing much more business in my part of the country than the dominion loan board.

A few years ago this board was practically dormant; it was not doing any business, and I do not know the reason for that. For several

years very little business was done. Apparently they were sitting back trying to make collections on the loans they had made years ago. Now we are in the position in some places where the average age of farmers is 60 and over. Why is that? It is simply because boys are not able to get loans to start farming. Unless you have in excess of at least $10,000 you can hardly get started on a farm.

Up to the present time, at any rate, the government has not suffered any losses on loans because the values of farm properties have been increasing every year for the last 15 years, so much so that they are double what they were 10 or 15 years ago. Therefore the government has not been losing any money on loans made on these farms.

The bill calls for a 65 per cent limit on the loan. It should be raised to 75 per cent. That would not be too high, because a farmer would not get any more than 50 per cent of it anyway. There is no reason why the amount should not be raised in some instances, at any rate. The requirement of gilt-edge security on every loan that is proposed or asked for is holding back the young farmers of this country. They are not able to get the money they want.

Why is the dominion government not able to lower the interest rate on these loans? Some will say it is owing to the fact that they are small loans and they cost too much to make. If the Ontario farm loan board can lend money at 4 per cent there is no reason why the dominion board could not lend it at the same interest rate. That rate is high enough when you consider the remuneration farmers get for their efforts. I would suggest that the interest rate be lowered to 4 per cent and that the percentage be raised to 75 per cent of the value. That would give many of these boys a chance to spread themselves and operate their farms more efficiently.

I do not intend to say very much more, but I hope some consideration will be given to some of the proposals I have made.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
LIB

Henry Alfred Hosking

Liberal

Mr. H. A. Hosking (Wellington South):

Mr. Speaker, I wish to speak for just a moment or two on this bill. I would like to commend the government for making larger amounts of money available to farmers, and at an interest rate which they will consider to be fair. Most of us know that in the last three years the farming industry in Canada has been the hardest hit of any of our industries. It is right and proper that we should do some things to help the farmers in the province of Ontario; therefore I commend the minister for presenting this bill.

But, specifically, I would like to make another point with regard to servicing the

farmers through the farm loan board. Located as it is in the centre of Toronto the office is in an extremely difficult place to find and like most places in Toronto it is practically inaccessible. I would say that is a kindly criticism of the city of Toronto, which has grown much too large to house a farm loan office. This office should be moved to a location where farmers could find it without the difficulties they experience in the city of Toronto.

Having passed that comment about the office, and having brought to the attention of the minister the fact that going to Toronto is an extremely difficult operation for a farmer, I would like to make a recommendation. Before doing so I might point out it is particularly difficult for the type of farmers who require loans to go to Toronto. They are not as familiar with the large cities as are some of the farmers who do not require loans. Looking for the office is a difficult and unpleasant task for them.

I should like to recommend that the city of Guelph is a more central location. It is the centre of gravity of the area requiring farm loans having as it does the agricultural background of a city which contains the largest agricultural college in the British Empire and the famous Ontario veterinary college. Guelph would be the proper place in which to locate an office to give service to those farmers who would benefit by these increases made by this new farm loan act which is before us.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
LIB

Louis-René Beaudoin (Speaker of the House of Commons)

Liberal

Mr. Speaker:

May I suggest to the hon. member that if we are to have every hon. member in this house suggest that an office of the farm loan board should be established in his constituency, perhaps I myself might join in the concert and ask that there be one established in my own constituency. There is no limit to that. There is certainly nothing wrong with asking that an agency be placed in one's own constituency, but I do not think the proper time to do so is when we are discussing the second reading of this bill.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
LIB

Henry Alfred Hosking

Liberal

Mr. Hosking:

Thank you, Mr. Speaker. I shall now close my remarks by thanking the minister for making more money available in loans in view of the fact that the cost of buying farms has increased. I should like to express my appreciation for his having made this money available to the farmers.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
CCF

Edward George McCullough

Co-operative Commonwealth Federation (C.C.F.)

Mr. E. G. McCullough (Moose Mountain):

Mr. Speaker, the bill before us is an act to amend the Canadian Farm Loan Act, and has to do with the extension of credit to agriculture. I might say that the whole problem of adequate credit to farming in Canada is extremely complex, and is one which I think deserves the attention of all hon. members 67509-1461

Canadian Farm Loan Act of this house. Agriculture is a basic industry in Canada and as such I think it demands the attention of all hon. members.

I believe the government has come to realize, in respect to the method of financing this type of credit, that the procedure has been very clumsy in the past. The amendments proposed will make some changes in that respect. However, I want to deal more particularly with the terms of the loans which are made to farmers.

I might say, Mr. Speaker, that in Saskatchewan this matter has been given a great deal of attention. I suggest that the commission which has been set up to investigate the picture of agriculture in Saskatchewan has done a remarkably good job in setting out the problems which face agriculture in respect to credit, and also the other problems related to the rural life of that province. I do feel that there may be differences of opinion, and the need of credit for agriculture in various provinces may differ. Essentially, however, the needs are the same.

Agriculture as a vocation is a very precarious one, where the producer not only has to face the vagaries of weather conditions but also has to face the fact that his return, in other words the market price for his commodity, varies considerably from time to time, I believe that is one reason why lending on farms in Saskatchewan through the banks came to a stop, because of the experiences of the banks and mortgage companies in the 1930's. But today I believe there is a great need for adequate lending facilities to the farmer.

I think it is essential that we understand exactly what we are trying to do when formulating policies of credit for agriculture. It is important to understand whether we want to advance the idea of corporate farms, or whether we believe that the family farm is the kind of institution we should have in Canada and relate our credit policies to the promotion of the best interests of the family farm. I was very interested in this matter, and I think the different methods we have of providing credit for agriculture in Canada are not satisfactory. First, they are varied in such a way that the farmer does not know exactly how to obtain that credit. In some cases the loans are overlapping, and we find a great deal of misunderstanding in respect to what a farmer may get in the way of credit.

The bill proposes to increase the percentage of the assessed value of land on which a farmer may get a loan from 60 to 65 per cent. I agree with the previous speaker that even though this is an advance over the previous figure, it still is not satisfactory, because the officials of the board in

Canadian Farm Loan Act assessing the farms are very conservative in their appraisals, and consequently 65 per cent does not represent an adequate assessment for the provision of loans. I suggest that we should perhaps change this to bring it more into line with what is being done in the United States.

I took the opportunity of inquiring about the methods adopted in the United States with respect to credit to agriculture. I find that in the United States they have a very great number of different methods of giving assistance to farmers by way of different types of loans and different types of credit. Whilst I do not entirely agree with everything they have done, I think they have a measure of credit to the farmer greatly in excess of what we have in Canada. In the first instance, under the farmers' home administration, the provision is for 90 per cent of the assessed value of the land. That is very important, because today it is recognized that agriculture is becoming more highly mechanized.

As I stated earlier, the royal commission studying agriculture in the province of Saskatchewan has indicated that there is a direct relationship between the capitalization of each farm and the net income. As an example, it is indicated that a farm in which there is a total investment of $17,000 realized twice the net income of one in which the total investment was $10,600. Then it goes on to say in the report:

. . . two-thirds of Saskatchewan's farms are undercapitalized and realize less than adequate average Income.

It is pointed out that when the point of capitalization is reached where the farm becomes efficient, then of course that increases the income to that farm unit. I might say, in respect to the amount of the loan on any one farm, it is being increased under the bill from $10,000 to $15,000. I think this is a move in the right direction, but I wish to point out that it has been found in investigations made by the royal commission in Saskatchewan that the average farm there requires something more than $17,000, and it is pointed out by authorities that the family farm, to be adequately capitalized and properly mechanized, would perhaps require closer to $25,000 or $30,000. I think this bill, making provision for a maximum loan of $15,000, is totally inadequate to meet farming conditions, particularly in my province of Saskatchewan, and I believe the same conditions would pertain in other parts of the dominion of Canada.

As I said at the beginning, it is very difficult to assess just what type of credit we need for agriculture. If it is to be successful in giving security to the family farm and making

sure that the family farm has an adequate income comparable with other vocations, it will be essential, first, that we have agricultural policies to guarantee the income of that farm. I am acquainted with the experiences of the farmers in Saskatchewan who have suffered tragedy because of the vagaries of the system by which the prices for what they produce go up and down. A farmer might have an economic unit that is mechanized, highly specialized and productive, but when prices go down of course that investment brings in a very small return to the farmer; he will find himself mortgaged and with a load of debt and interest that he cannot carry. So I think we have to take a second hard look at the methods of providing credit for agriculture.

I believe that the 5 per cent interest provided in this case is far too high. Instead, the government should set up some type of farm administration for the provision of credit to agriculture, and it should be set up on a revolving fund basis, with the lowest rate possible being charged to borrowers under the scheme. I believe such a plan should be carried out with an interest rate of 2 or 3 per cent, very little more than the government would need to pay in order to get the money from the Bank of Canada.

If this were done, and we had proper supervision of these loans to the farmers, in the same way as is done under the farmers' home administration act in the United States, so the farmer would get adequate technical advice in respect to the methods of farming, construction and planning of farm buildings and all the associated experience and technical advice that could be given to him through that type of administration, then we could build up in Canada what might be called a morale amongst our farmers and we would show a high regard for the moral obligations involved in providing such a type of credit to the farmers.

I have had some experience with credit unions, and I know that under their plans there is a moral obligation to those taking out loans. The loss on loans provided under the credit union plan is very small. I am quite sure if it were known in the community, that a farmer was getting a loan under the type of plan I am suggesting, namely a low interest rate loan which would be properly supervised through advice to that farmer, then I am sure there would be a moral obligation and there would be very little risk involved.

I believe such a plan would provide a healthy atmosphere for agriculture. The farmer today is facing tremendous difficulties so far as the prices he receives for his commodities are concerned. As everyone knows,

the farmer from coast to coast is caught in a price squeeze. The situation may vary from province to province; nevertheless it is probably similar in every province. The fruit grower, the vegetable grower, the market gardiner, almost every producer today is working in a very competitive field, not competitive as between different producers but competitive in the respect that the farmer must minimize his costs in order to stay in business.

I do not think there is another vocational group in Canada who display the co-operative spirit that prevails in agriculture. I know that on occasion almost every farmer of my acquaintance lends expensive machinery to his neighbours. This takes place on almost every farm in the province of Saskatchewan, and I presume the situation is similar in every other province. Therefore while there is not competition between farmer and farmer, there is the competitive aspect to which I have referred, as a result of which the farmer must be highly specialized and competitive from the point of view of trying to keep down his costs.

Here we have a proposal to make it possible for the farmer to borrow money from the Canadian farm loan board at 5 per cent interest, and if there is any default the farmer then has to pay 5| per cent interest. I think Canada is far behind other countries which have undertaken to try to adequately finance farmers in need of specialized credit. While the loans under this legislation are intended to provide long-term credit, I do not think they meet the situation adequately. A maximum period of 25 years is provided, but under the home administration act of the United States loans are made for 40 years and, as I said before, the initial interest rate is 3J per cent.

In addition, there are other types of loans available in the United States by which the living standards of rural people are raised. I should like to mention the administration of the rural electrification branch of the United States department of agriculture. This is a most amazing type of credit that is provided to farmers in the United States. The scheme has been in operation since 1935, and I think we in Canada should have taken an earlier look at exactly what they are doing in that great country to the south of us. I am sure the people of the United States would be the first to recognize that they have not found all the answers, and that even yet they have not all the credit facilities necessary for a healthy agriculture. Yet they have gone much further than we have.

I have here a statement on the rural electrification administration in the United States,

Canadian Farm Loan Act in which it is pointed out that since 1935 loans have amounted to $3,106,085,511 and borrowers have used the loan fund to extend electric service to nearly 4,200,000 rural consumers and have built 1,350,000 miles of line.

Here is a program which provides credit to people living in the rural parts of the United States, and of course it raises the standard of living of those people. I do not think any comparable type of credit is given to agriculture in Canada. I know that under provincial legislation in the province of Saskatchewan a large grid system is being built throughout the province, and the electrification of farm homes is being accelerated. We have there a subsidization program to the farmers which provides around 50 per cent of the cost of installation, but the farmer still has to dig up $400 or $500 in order to complete installation on his farm.

I believe the federal government has been remiss in not accepting its responsibility, taking a look at the picture and providing credit for some of the needs of our rural people. When the bill goes to the standing committee on agriculture and colonization I hope a study will be made of ways and means of providing more adequate credit for agriculture. One important phase of such a credit proposal has to do with the young people who really do not have the credit standing to be able to obtain a loan. They are the people who are hardest hit under the suggested program of the Canadian farm loan board. It is not so bad for an established farmer, who perhaps can get credit either through his bank or by making application for a loan under this legislation, but I am more particularly interested in the young farmer who is trying to set up his farm and needs credit in order to make it highly efficient.

We find that land values are high, and that a capital outlay of $15,000 or $20,000 is required. Such an amount of money is not available to the average young person. Therefore I suggest that the government should give consideration to making it possible for young people to get larger loans. I also suggest that loans should be available under this legislation to the small farmer whose operation is perhaps uneconomic because of the size of his farm, and who wants to get a loan to buy additional land. As the legislation now stands, I believe there is a requirement that there must be buildings on the land before a loan can be given. I think there should be some easing of the qualifications required of a borrower in order that he may get a loan from the Canadian farm loan board.

This legislation has been in operation for some 20 years or more, and when one realizes

Canadian Farm Loan Act that something less than $100 million has been borrowed one can readily see that the legislation has not played its full part in providing the type of credit needed for agriculture. I realize that the bill is going to the standing committee, and I am sure the members of the committee will try to do the necessary research. Perhaps they will call certain people to find out what has been done in the United States and what is being done in Australia, where I understand a large revolving fund has been set up from which money is lent at 2 per cent interest in order to provide the necessary credit for rural people so they can improve their living standards and become highly efficient.

I am suggesting that certain changes are needed in our legislation. The present high cost of production and the general inflationary condition across the country warrant some changes in it, and I hope that when the bill comes back to the house the committee will have seen fit to amend it along the lines I have suggested.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
LIB

James Moffat Forgie

Liberal

Mr. J. M. Forgie (Renfrew North):

Mr. Speaker, I do not presume to speak for the rest of Canada but I can speak about the county of Renfrew, which lies along the right bank of the Ottawa river about 100 miles from here. I have discussed the question of the farm loan board with many of the farmers there, and they are well pleased with the amendments that have been brought forward at this time.

As far as farming is concerned, the main industries are dairy farming and stock raising. Together with lumbering they are outstanding industries in my section of the country.

As far as my farmers are concerned, the amount of the loan is eminently satisfactory. I have been associated with this Canadian Farm Loan Act since 1929. I left my position only when I was honoured by being elected to this House of Commons in 1953. I can say without fear of contradiction that never in my experience has a loan of $15,000 been asked for in Renfrew county. The average loan amongst my farmers has run between $3,000 and $4,500. Hence when this amount is raised to $15,000, the appraisal is raised to 65 per cent, and the chattel mortgage and the second mortgage are removed from the provisions of this act, I think I can confidently say that this act, in the opinion of my farmers, is satisfactory.

The removal of the second mortgage and the chattel mortgage provides a cushion between the first mortgage of the Canadian farm loan board and some calamity that may happen to a farmer after he has taken out

the first mortgage. It frees his cattle, all his stock and all his equipment, so that if he arrives in a position where he needs further loans, he has ample security with which to obtain them. I therefore do not agree with my friend the hon. member for Moose Mountain when he says that the conditions that prevail in western Canada prevail throughout Canada as a whole. I prefer to speak about sections of the country that I know something about rather than to deal in generalities.

As far as western Canada is concerned with respect to these loans, I have a little bit of experience in that connection, because I happen to have been a land owner for some considerable time in Saskatchewan. As I look at the annual report of the Canadian farm loan board I find that in Saskatchewan the outstanding loans amount to approximately $10,247,917.17. That is not very much money on the security of the farms of Saskatchewan. A more interesting document is the one that I received on February 7, 1956, from the Monetary Times, to which I wrote asking if they could give me the situation in the western provinces in connection with mortgage loans on farm lands in those three provinces from 1937 up to the present time. Mr. Speaker, if I may I should like to incorporate this letter in Hansard, because I think it reveals some significant figures and indicates possibly that sometimes a little bit of politics creeps into some of the remarks that are made in this chamber.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
LIB

Louis-René Beaudoin (Speaker of the House of Commons)

Liberal

Mr. Speaker:

A letter cannot be placed on the record unless it is read. Does the hon. gentleman intend to read it?

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
LIB

James Moffat Forgie

Liberal

Mr. Forgie:

I should like to have the opportunity of reading it and placing it on the record.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
LIB

Louis-René Beaudoin (Speaker of the House of Commons)

Liberal

Mr. Speaker:

The hon. member is quite sure that whatever is contained in that letter is quite relevant to the principle of this bill?

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
LIB

James Moffat Forgie

Liberal

Mr. Forgie:

Very definitely. I want to establish the fact that loans in Saskatchewan or in those western provinces are not as urgently sought as has been indicated by many hon. members who have already spoken. I should like to say that the total loans in the three provinces made by the Canadian insurance companies operating in Canada, the United States insurance companies operating in Canada, the British insurance companies operating in Canada, the trust companies and the mortgage loan companies in 1937 amounted to $182,286,000, of which $107 million was loaned in the province of Saskatchewan. In 1954 that $182 million of loans had been reduced to $20,240,000 and the

loans in the province of Saskatchewan had been reduced from $107 million to $6,500,000.

Mr. Speaker, I think it would be a wonderful investment to own the equity security of a corporation that could reduce its senior indebtedness from $182 million to $20 million in that space of time. I should just like to mention this in passing-

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
LIB

Louis-René Beaudoin (Speaker of the House of Commons)

Liberal

Mr. Speaker:

May I suggest to the hon. member that in my humble view this moment is not the time to examine the position in the various provinces as to the amount of loans that have been requested or obtained by them in the past. We are dealing with a bill to amend the Canadian Farm Loan Act. It has to do with further credit being granted under the act. As long as we remain within that environment, we are all right. But if we go outside of it, we are contravening the rules.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
LIB

James Moffat Forgie

Liberal

Mr. Forgie:

My object in bringing this material forward was to prove that there is not the demand for loans that is suggested, and that the farmers in those provinces apparently are in a strong enough financial position that they do not require loans. That is one reason.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink
?

An hon. Member:

Let the farmers speak for themselves.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
Permalink

March 20, 1956