March 20, 1956

LIB

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

Liberal

Mr. Speaker:

Notwithstanding the worthy objective of the hon. gentleman, I do not think he should be allowed to make that point on this measure.

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

James Moffat Forgie

Liberal

Mr. Forgie:

Mr. Speaker, I do not claim that the provisions of this act, including the amendments, have reached a stage of perfection. I think that the inspection department of the Canadian farm loan board could be stepped up. It takes too long to inspect a property. Certainly speaking for my section of the country, I can say that it takes too long to obtain a report as to the security offered by the farmer. I would therefore suggest that the inspection squad be increased or that possibly the field men under the Veterans' Land Act might lend some assistance. The field men who are operating under the Veterans' Land Act are extremely efficient.

I also think the form of application should be simplified. I believe the application form is too cumbersome. I would therefore suggest that attention and study be given to that matter with a view to seeing if the application form could not be simplified. In my experience the farmers find it most difficult to make that form out. I think the terms of payment are satisfactory. If the farmer wishes to pay his loan within 24 months from the time he has taken it out, he must of course

Canadian Farm Loan Act pay a bonus as well as the principal and interest up to date. But if after the expiration of the two years he desires to pay off his loan, he can then do so without notice and without any bonus.

I think the advertising under this Canadian Farm Loan Act is being done in the proper place, namely through the farm journals. I cannot see any advantage in spending a great deal of money on having advertisements placed in the local papers throughout the country.

Since I understand this bill is going before the standing committee on agriculture and colonization in the very near future, I shall defer any further remarks I desire to make on this matter.

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

Gage Workman Montgomery

Progressive Conservative

Mr. G. W. Montgomery (Victoria-Carleton):

I shall only take a few minutes, Mr. Speaker. I have been interested in the remarks made on this bill by various hon. members. I understand it will be referred to the banking and commerce committee, but I believe we should make any suggestions we have at this time so they may be considered by that committee.

First I should like to say that I believe these amendments are improvements in the act, so far as they go. However, I feel that, speaking for my own sectiori of the province and as a result of my own experience, the increase in lending value from 60 to 65 per cent is hardly enough. I think that farmer's land is usually valued quite low. I know the manager of the board in my own province and I think he is very conservative, though he tries to be as generous as the regulations will permit. On the other hand, like a banker he is going to take no chances of showing any losses to his head office. On several occasions the local valuator or assessing officer, whichever you wish to call him, has been inclined to follow municipal assessments. In my particular area the assessments run very close to 50 or 60 per cent of the valuation.

Recent reports show that there is not too much advantage taken of this act. The reason is that farmers find the value placed on their farms does not bear any relation to the selling value. I feel that the manager of the board in my province is doing the right thing under the provisions of the act, but I do feel you should give him more latitude. I feel that an increase of 5 per cent, from 60 to 65 per cent, in the lending value is not enough.

I agree with the hon. member who suggested it should be raised to 75 per cent. I do not think you will find, under management such as we have had in my province, that you will have any losses if you permit

Canadian Farm Loan Act the manager to make loans on a valuation of 75 per cent. I know that some applications have been turned down, and rightly so, but I do feel some consideration should be given to the family farm unit, as one hon. member put it. I think it is important to help a young man get started in order to keep him on that family farm. I should like the committee to take into consideration increasing the lending value from 60 to 75 per cent.

I feel that it was a good thing to cut out the second mortgage. So far as the interest rate is concerned, it does seem high. Again, I believe this committee will look into that and if there is any justification, if the handling and administrative costs call for a rate of 5 per cent, 1 know that my people would not have any serious objection. What they really need is a place to go and get money when they need it. Today, with so many people investing in bonds and stocks which are so much easier for older people to handle and which give a secure return on a certain date, people are getting away from lending on mortgages. In my part of the province at least a farmer cannot go out as he used to do and borrow from his neighbour or some retired man who had a few thousand dollars. He has to depend on this loan board.

There is another unfortunate circumstance about which I do not think we can do very much. Many of our farmers will apply for this loan in the fall of the year, and of course you cannot have an inspection while the snow is on the ground. I do not suppose this difficulty can be overcome, but it means the farmer cannot get any money until spring. Often he has to dispose of assets at sacrifice prices in order to carry on until spring when he can have the place inspected and get a loan.

It looks as though this problem is difficult to overcome. However, in my particular area I think the inspector is generally quite familiar with most of the farms in the territory. I know that in several cases, if he were permitted, he could make just about as good a report on that place during the winter with the snow on the ground as he could when the snow has gone. I am asking, however, that the committee look into this matter. One thing I do feel like pressing for in behalf of my people is that the provisions of the act do not give sufficient latitude to the local manager in making loans. They hold him down to a valuation which is equivalent to a small part of the actual selling price of the place.

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

Colin Emerson Bennett (Parliamentary Assistant to the Minister of Veterans Affairs)

Liberal

Mr. C. E. Bennett (Grey North):

I just want to comment very briefly on this bill. The Canadian Farm Loan Act has not been used

to any appreciable extent in my district, but I think it will become increasingly important in the next two or three years because the sources of first mortgage money on farms have been drying up. About five or six years ago we could get first mortgage money on farms from loan companies and individuals. These people are now finding more attractive investments, and I suppose that results partly from the fact the farmer's real income is down. I believe, therefore, the Canadian Farm Loan Act will be used to a greater extent in Ontario in the next few years.

I was glad to see that the percentage ratio of the lending value has been increased to 65 per cent. All in all this act has been administered effectively and well. If I were to offer any critical comment on the administration of the act, I would say that the appraisers have been rather conservative in making their appraisals. I hope that under the new amendments the appraisers will take the full market value of the farm and then apply the 65 per cent.

If I were to say anything else that could be construed as critical, I would say I do think it takes a long time to process the applications under this act. I know there are reasons for these delays. Sometimes it is the lawyers searching the titles; sometimes it is the appraiser being slow getting on the scene; sometimes it is the applicant himself. I wish though that the parliamentary assistant to the Minister of Finance would discuss the matter with the chairman of the Canadian farm loan board to see whether these loans can be speeded up. The fact is that one can get a loan much quicker through a trust company or an insurance company than under the Canadian Farm Loan Board Act.

Like previous speakers, I am glad that chattel mortgages and second mortgages are being eliminated. I do not believe they served any useful purpose. From the federal point of view I think all of us want to help the farmer, particularly the farmer whose real income is down. Sometimes from that federal point of view we are limited in the way in which we can help the farmer. The Canadian Farm Loan Board Act and legislation such as the Farm Improvement Loans Act constitute a way in which we can offer real help to the farmer, and therefore I welcome the amendments to this act. I welcome the fact that the legislation is being widened and liberalized and I say to the parliamentary assistant, I hope this act will be interpreted and administered in a generous and liberal way.

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

Charles Yuill

Social Credit

Mr. Charles Yuill (Jasper-Edson):

I think we in this group are very much in favour of this bill. However, there are aspects of it which do not appeal to me as the bill in

general does. I refer, of course, to section 6. The proposed amendment provides that loans may be made up to 65 per cent of the value of the land, with a maximum loan of $15,000. I come from a part of Alberta where the assessment on the land is at a very low level. It is a new area. The assessed value is perhaps equal to only about 30 per cent of the true sale value of that same property today. The result is, it makes it very difficult for worthy farmers to participate in these loans.

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

William Moore Benidickson (Parliamentary Assistant to the Minister of Finance)

Liberal Labour

Mr. Benidickson:

I think my hon. friend is under a misapprehension. The board sends out an appraiser to establish its own appraisement. The assessment of the property does not govern.

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

Charles Yuill

Social Credit

Mr. Yuill:

I am sorry to contradict the parliamentary assistant. What I say is so. They use the municipal assessed value as the yardstick of values. I know that has applied to several loans I tried to have established.

I believe this will work very well in areas where the assessment is perhaps at its normal level. I do not think it will work any hardship there, because they will get a closer relationship to its true value than they get under conditions which exist in my particular area. Consideration could be given to the idea of having those loans geared to the true value. I do not mean the inflated sales value but the real sales value of the property. This would be much fairer in the administration of this legislation.

Another thing seems to be uppermost in the minds of the members of the administration who are responsible for appraising these loans. It seems obvious to me that they have the feeling that if you owe $100 in arrears of taxes it is a greater sin than if you owe $100 in some other legitimate debt. I have found that they frown on anyone who happens to be in arrears of taxes. Arrears of taxes should be given every consideration in their true perspective, but they should not be the reason a loan is denied. Emphasis should not be placed on this particular phase of the current debt.

In the main this is a wonderful thing. It is certainly going to be a boon to the farmers in my constituency. The availability of more money, with some of the other restrictions taken off, is certainly a step in the right direction. In all sincerity I would ask those in charge of the administration to take a little more realistic and kindly look at the financial ability of those people who merit a loan in the first place. I do not think it is fair to say that when a property is assessed at 30 per cent of its sale value and a credit of only 65 per cent is given, a very realistic 67509-147

Canadian Farm Loan Act view of the matter is being taken. I would urge that special consideration be given to granting 65 per cent of the sale value rather than the estimated assessed value in areas where the assessment is away down, and perhaps below cost.

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

Henry Philip Mang

Liberal

Mr. H. P. Mang (Qu'Appelle):

I should like to express my pleasure to the government for introducing Bill No. 84, to amend the Canadian Farm Loan Act. It is the third bill brought in this session of particular interest to agriculture. Bill No. 82 and Bill No. 83 have already received royal assent, and this legislation now before the house will, I hope, be speedily passed so that it may become operative at the earliest possible moment.

The proposed amendments are important because they should give the act a wider application and, therefore, make it more useful. As has already been emphasized by previous speakers, the need for long-term credit facilities is becoming increasingly more necessary. This is so for various reasons. First is the fact that farm mechanization has brought about a higher level of capital requirements for efficient operation of the farm unit.

To illustrate, it is only as recently as 30 years ago, back in 1925, that the power on Saskatchewan farms was supplied practically entirely by horses. Only one in every 45 farms was powered by the tractor. When horses were used the natural increase supplied adequate power to operate a farm, with little cash outlay. The grain and hay used by the horses supplied the fuel requirements necessary to till the soil and to take off the crop. While it is true that this part of the farm operation had a cash value, nevertheless it did not require a cash outlay immediately. The actual power was produced on the farm itself without the cash outlay.

Today there are no horses, and tractor power requires a fuel which necessitates an outlay of dollars. In other words the cash requirements of the farmer are intensified. That is one reason inability to market a crop immediately after harvest causes a cash shortage. This matter has been discussed at length in the house very recently, and there is no advantage in labouring the point any further.

The requirement for a heavy immediate cash outlay in the operation of a farm is such that the need for flexible long-term credit machinery is imperative. In years gone by a larger proportion of the cash return from crops could be applied to the financing and repayment of any mortgage indebtedness. Today, due in great part to mechanization, the greater part of a year's production must go into current operating expenses.

Canadian Farm Loan Act

In a production area such as the western plains the crop fluctuations are sometimes fantastic. The fluctuation in Saskatchewan has been from a low level of 2-7 bushels per acre in 1937 to a high level of 26-5 bushels per acre in 1952. Taking the year 1954 as compared with 1955, the 1955 crop was practically twice the yield of 1954. It is this instability of production with the accompanying instability of cash returns, together with the rapid trend toward intensified mechanization, which emphasizes the merit of amending the Canadian farm loan legislation. More than ever this medium must provide longterm credit at the present time.

The second necessity for widening the application of the act stems from the problem confronting the young man who wants to go into farming and build a home of his own. In the vast majority of cases the parents have been operating the farm for the past 40 years or so. Most of the equity of the farm, if not all of it, is tied up in land and machinery. The son or sons who wish to take over have not the funds to buy out the parents, so of necessity there must continue a joint operation.

What the young man of today wants is to obtain enough cash so the parents can retire to the nearby village or town. In most cases he has already invested his lifetime of work in that farm. Where the working together of the son and the parents on the same farm is possible it is a highly satisfactory arrangement and provides for a happy continuity of the farm operation, but in many cases this is neither a practical nor a happy arrangement. The parents wish to remain independent of the young farmer and his wife, and the young farmer wants to build a home for himself and his wife and wants to live independently. This act, with the present proposed amend-nents, if applied in the proper spirit can do nuch to build morale and preserve the independence of spirit and contentment of both the parents and the young farmer who carries on.

The third angle I wish to stress is of a more local nature, yet has a fairly wide application in Saskatchewan and in Manitoba as well, I believe, due to circumstances which have arisen during the last four years of heavy rainfall. Some areas of the province of Saskatchewan have been particularly hard hit by flooding. The flooding of farm lands is a serious matter in the eastern part of my own constituency as well. Individual farms have been flooded for two, three or four years in succession, and there are prospects of another flood this year. Not only has it been impossible to seed these individual farm units, but in these areas pasture lands have been rendered useless. In these areas cattle as well as [Mr. Mang.l

grain are part of the farm production. Hay lands have been flooded and cattle holdings have had to be reduced.

For farmers in such a position it is an individual tragedy and a financial disaster which wrecks the hopes and aspirations of a lifetime. Taxes, living costs and general expenses are rapidly putting some people in a hopeless financial position and sentencing them to a hopeless and unhappy future. The tragedy of this situation is that a neighbour, whose land is of such elevation that it is not flooded, is reaping a harvest and raising stock. This destroys the morale of his less fortunate neighbour.

I have had personal experience with the situation I am describing, because on my own farm last year 25 per cent of my cultivated acreage did not see an implement. My immediate neighbours got a crop and I got the water which ran off their land. Over half the rural municipalities in my area have many individuals in this condition. In some cases besides losing their hay land the farmers have seeded less than 10 per cent of their cultivated acreage for the past several years, and the prospect for this year is not too good.

. The Canadian Farm Loan Act properly applied, with the present amendments, is the medium through which people in this position can be helped to survive and be rehabilitated. Indeed it is their only hope. Our Canadian farm economy on the prairies must have policies based on a long-term view because of the factors of instability due to weather and price. This act at the present time is the only act which provides machinery to assist in this stabilization for the farmer afflicted with flooding. The farmers in the position I have just dealt with cannot be rehabilitated under any other measure, either provincial or federal.

The hon. member for Moose Jaw-Lake Centre pointed out the other day that the provincial laws in Saskatchewan have been so designed as to preclude the free extending of credit by mortgage companies or private individuals. Indeed, the purchase of land today is practically on a cash basis. P.F.R.A., a federal agency, is not designed to meet the situation, nor is P.F.A.A. in its present form.

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

Edward George McCullough

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

Mr. McCullough (Moose Mountain):

Mr. Speaker-

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

Henry Philip Mang

Liberal

Mr. Mang:

Just a minute. You have talked quite a bit today. The amended Canadian Farm Loan Act is the only agency capable of filling the present need. However much I welcome the present amendments I cannot refrain, however, from making a few comments which in my view could make the act more useful and effective.

Had I the drafting of the amendments at my command, I would have raised the figure

to 75 per cent of the appraised value instead of 65 per cent. Also I would have included specific provisions for flexibility of repayment, offering, for example, a discount for prepayment of yearly instalments during good years. This act, like every other enactment, meets its final test in its application. My experience with the operations of the act has proven to me that its application requires closer personal attention.

Hon. members from Saskatchewan will recall that year after year we have seen news items in the Saskatchewan press to the effect that the board in Saskatchewan has not lost one dollar on its operations. I have had considerable experience with the board, and I am not surprised at this record. While the board has been fair in relation to the mortgage basis of its operations, anyone who has attempted to obtain or has been successful in obtaining a loan knows it is quite unlikely that the board will lose money.

My own view is that the Canadian farm loan board should administer the act, as it is being amended by the present bill, in the same spirit, for example, as the Veterans' Land Act. That would personalize the application of the act, and I believe that is what is needed. There need be no fear of unbusinesslike loans or severe losses. Under the Veterans' Land Act personal visits are made by the field staff, not solely for the purpose of collecting money but to assist the young farmer by way of advice and suggestions. The supervision is of a personal nature, and contacts are maintained throughout the period of the operation under that law. If the farm loan staff were increased with good public relations personnel, who could also be the appraisers, if you will, a great service could be rendered to both the borrower and the lender under this act with its new amendments.

I shall be watching the operations of the board under the new amendments very closely. I am confident that it will play a great and important part in the realistic farm program of the government, which has done so much throughout the years to stabilize agriculture, particularly during the last two decades. I apologize, Mr. Speaker, for keeping so close to my notes; this is the first time that I have adhered so closely to my text.

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

Edward George McCullough

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

Mr. McCullough (Moose Mountain):

I rise on a point of privilege. The hon. member stated that the province of Saskatchewan has legislation prohibiting the making of loans on farms. That is incorrect. He may be confused. Rather we have the farm security act, which provides security to the farm owner of a quarter section-

67509-147J

Canadian Farm Loan Act

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

Henry Philip Mang

Liberal

Mr. Mang:

Just to keep the record straight, of which I am very fond, I wish to say that I did not say "prohibited".

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

William Alfred Robinson (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

Order. The point of order raised by the hon. member for Moose Mountain was not a true question of order or privilege, in my opinion. On the other hand, the hon. member for Qu'Appelle had taken his seat and is not allowed to speak again.

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

Herbert Wilfred Herridge

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

Mr. H. W. Herridge (Kootenay West):

I had

a few words to say on this question during the resolution stage, but I do not apologize for rising again to re-emphasize one or two points I mentioned then, because this legislation is of considerable importance to a number of my farmer constituents.

I must say in the first instance that we welcome the legislation. Throughout the years the act has been of great advantage to many Canadian farmers, and this bill is some improvement. But I wish to re-emphasize three or four criticisms of the amendment itself and suggestions to the administration.

Again I say I cannot understand, after the experience with agricultural credit in the older countries and in view of the soundness of loaning money at 3 per cent, why our farmers are required to pay the present rate of interest. If there is any group of people in Canada who should receive money at something approaching cost, it is our farmers. I hope that when this bill goes before the committee the members of that committee will pay some attention to representations made in the house in connection with that matter.

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

William Moore Benidickson (Parliamentary Assistant to the Minister of Finance)

Liberal Labour

Mr. Benidickson:

It costs the government more than 3 per cent to borrow.

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

Herbert Wilfred Herridge

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

Mr. Herridge:

I question that. I think this money could be provided at 3 per cent, particularly if we use the machinery we have in the Bank of Canada. I notice there is an increase in the percentage of loan that can be given on the appraised value of the property. That is an improvement. I think the amount could have been raised as high as 80 per cent, according to the representations of the Canadian Federation of Agriculture.

Another point that is of interest to the federation is its recommendation for regional advisory committees. I am very much taken with that, because it is a practice that has been established in Great Britain, not only in connection with the advancing of credit but even in the operation of farms, marketing and a good number of other things connected with farming in general. I think it is

Canadian Farm Loan Act very necessary, because there is a tendency tor the board not to be in close contact with the farmers concerned and the particular areas concerned.

I agree with what the hon. member for Qu'Appelle said with respect to the administration of the Veterans' Land Act. I find there is a considerable difference in the personal touch as between officials of the Canadian farm loan board and officials of the Veterans' Land Act administration who pay periodic visits to a farmer after the veteran has been settled and has received his loan. Under the present circumstances, because of the lack of knowledge of the local land and circumstances, and sometimes complete lack of knowledge of the capacity of the farmer who is seeking to borrow the money, there are frequently unnecessary rejections of applications for loans.

I wish to illustrate that in two ways. Since the last war a man in my constituency of Kootenay West asked for a loan from the Canadian farm loan board. He was an experienced man who had been operating a farm some 25 or 35 miles south of that point. In this case I understand the application was rejected because they had no confidence in the capacity of the land to produce. It was rejected because they had not sufficient knowledge of the land and the local circumstances. That man managed to get along without a loan. Today he has a very successful operation and a large herd of beef cattle, and I think the farm would be worth in the neighbourhood of $35,000 or $40,000. That man has accomplished that since going on to that land in the last 11 years.

Then I have personal knowledge of loans being rejected because the board's officials did not have sufficient knowledge of the capacity of the farmer applying for the loan. In one particular instance there was a well known rancher in my district who was formerly an officer in the Indian army. When you spoke to him you would not be impressed with his knowledge of agricultural affairs but, as a matter of fact, he was known by his neighbours to be a very shrewd and capable man who soon picked up the art of farming. Anyway, he applied for a loan and was rejected; and it was purely on that account. I can understand that being done without the knowledge of the man himself. I remember one occasion when he first started farming. He purchased 200 day-old chicks and got sitting hens to mother them. After about two weeks half of them had died. He sent for the poultry commissioner for the district, and I can remember the poultry commissioner discussing them with him. He asked, "Did you do this?" "Yes".

He asked, "Did you do that?" "Yes". He asked, "What are you feeding them?" The man replied, "You silly ass; doesn't the mother feed them?" Because of that man's attitude and his lack of knowledge, his loan was rejected.

I can remember quite well another gentleman causing my wife considerable concern by arriving at our home when I was away and wanting my wife to attend to a certain matter. My wife suggested he tell her all about it. He said, "I try to be a gentleman, and I don't want to discuss a barnyard scandal with a lady". Anyway, he finally did. He asked my wife to go and gather up one of our white barn roosters because it was an abominably licentious fellow. Anyway, I mention this because I know one or two cases like that where keen, capable-minded persons were turned down because the officials made a shallow assessment of the man's ability.

If there had been a regional advisory committee that would not have happened in either case. A regional advisory committee selected from the local farmers' institutes, the locals of the B. C. federation of agriculture or from the locals of the British Columbia fruit growers' association would have known the circumstances concerning the land, and would have known the capacity of the individuals concerned. I think that is an excellent recommendation on the part of the federation of agriculture.

I also think something more should be done to promote a better knowledge of the act among the farming population generally, and to increase the business done. Instead of the officials making, as they do in British Columbia, a hurried trip into the interior to visit a farmer who has made an application, stopping at a hotel overnight and returning to New Westminster the next day, I suggest that they would be well advised to take the opportunity whenever possible to address meetings of farmers' institutes, locals of the B. C. federation of agriculture, even locals of women's institutes. Women are interested in these questions, and we have quite a number of women who are successful as poultry farmers. Incidentally, when applications for loans are made I think there should be no distinction as between men and women. By following such a course the officials would acquire a knowledge of local conditions, they would get in touch with the farmers themselves, and they would get a much better knowledge of the land and circumstances generally.

Finally, I suggest again that there should be a decentralization of the administration. In a province as large as British Columbia,

a growing province where we want agriculture to expand to meet the growing needs of industry, it is not good enough merely to have an office in New Westminster. As I said before, in my opinion there should be at least one official permanently stationed in the southern interior and one in central British Columbia, in addition to the present office in New Westminster.

That is all I am going to say at this time. When the members of the committee are discussing and studying the bill I hope they will pay some attention to the various suggestions that have been made by members on both sides of the house who speak with some knowledge of the needs of their constituents, the requirements of the farmers and the deficiencies in the act at the present time.

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

John (Jack) Henry Horner

Mr. J. C. Van Horne (Resligouche-Mada-waska):

Mr. Speaker, my remarks will be very brief. It is the consensus of opinion of the farmers in my area that there exists an unnecessary lack of co-operation on the part of the farm loan board, and while we welcome the many improvements we find them insufficient. The delays are unnecessarily long in the processing of loan applications. The impression is given our farmers that unwarranted excuses are made to delay the inspection of applications. For this reason there is little need to wonder why so much bitterness sometimes crops up toward the farm loan board in my area. Instead of showing a spirit of helpfulness and co-operation with our farmers, some officials of the board are permitted to give the impression that every obstacle must be put in the way of our farmers when applying for a loan.

In my area there is some evidence of discrimination by farm loan board officials against our French-speaking farmers. Frenchspeaking personnel should be employed and made available, and the farmers of my area should be in a position to deal with the board in their own language. This is a right which is being denied many farmers in my area. I have in my riding thousands of families who speak no English, and they insist on their right to deal with government agencies in their own language.

Interest rates are unnecessarily high. The same observation applies here that applies to interest rates in the case of Central Mortgage and Housing Corporation. Over the years very few of our farmers in northern New Brunswick have been able to have their applications for loans from the farm loan board approved. As a result of all these factors I have mentioned, our farmers have thrown up their hands and do not go near the farm loan board because they all feel it is useless to do so. Therefore I suggest

Canadian Farm Loan Act that the procedure and the machinery for the processing of loans should be made more simple, and that facilities should be provided so that our French-speaking farmers can deal with the farm loan board in their own language.

The farm loan board should change their attitude of making loans hard to get, and adopt an attitude of co-operation and helpfulness toward our farmers. The restrictions should also be altered so as to make loans available to young farmers starting out. Loans should also be made available for operating costs over lean periods to help, for instance, our potato farmers who happen to be in their third year of very great hardship. The farm loan board in my area has a history of half service and lip service. It has never been an effective help to our farmers, and it has always been a case of too little and too late. A complete over-all shake-up is, in our opinion, long overdue in the farm loan board, as in so many other government agencies.

A whole new system of assessing the worth of properties should be adopted. As the hon. member for Victoria-Carleton and some members on the other side of the house have mentioned, our assessing for farm loan board purposes is often based on municipal assessments, which in my area run to about 50 per cent of the true value of the property. This means that in the long run the loans when finally approved, if ever, come to about 25 per cent of the value of the property. We also feel that the service could be improved by having a farm loan board office in northern New Brunswick.

Mr. Irvin Sluder (Swift Current-Maple

Creek): Mr. Speaker, a subject of this kind is of interest not only to farmers but also to all of the people of Canada. Because there are a great number of farmers and a great amount of money is involved, to the extent of nearly a billion dollars, no subject is of more vital and fundamental interest. The amendment of the legislation affecting the Canadian farm loan board is, in my opinion, one more instance of the government's advanced legislation on behalf of the farmers. It is the result of many years of experience, not only federal government experience but provincial government as well, because hon. members will recall that back in 1917 the province of Saskatchewan instituted a Saskatchewan provincial farm loan board. That board only operated until 1923.

Having profited from that experience, having determined what that board did not accomplish and determined to compensate for the lack of accomplishment and to profit

Canadian Farm Loan Act from the experience gained thereby, the federal government introduced legislation in 1927 to set up the Canadian farm loan board. I think we should dwell for a moment on what was the cause of the inefficiency, if we can call it that, of former farm loan boards.

I have here the report of the royal commission on agriculture and rural life in the province of Saskatchewan, which deals with the reasons why the Saskatchewan farm loan board of former years was not as effective as it might have been. I mention this because there is a demand among members that the interest rate should be reduced. We are all agreed that we want the lowest rate of interest possible, but not so low that it will defeat the purpose of the loan. The conclusion of the Saskatchewan royal commission on agriculture and rural life, as found on page 13 of their report, is as follows:

The Saskatchewan farm loan board was a useful but ineffective attempt to provide long-term credit to farmers on a provincial basis. Reasons for the failure of the board include: inefficient administration, interest rates too low to meet the costs of administration and of borrowing, difficult economic conditions of the 1930's and inability to spread loans over a larger risk area.

As a result of the experience of those years and with the discontinuance of the Saskatchewan farm loan board-the demise of it, it could be called-the federal government appointed individuals to gather the experience of all countries in the world with regard to farm loans. As a result of that experience, including the experience of the United States as well as that of every other country, the present Canadian farm loan board was originated and brought into existence in 1927 and became operative in 1929. Up to the present time it has lent nearly $1 billion. Hence this government, as the result of the wisdom of former people, has inaugurated a system under which it has assisted and extended credit to a great number of farmers and at the present time is extending those credits and those benefits to a larger number of farmers.

There have been some reasons mentioned as to why it is becoming more and more necessary to have government loans to farmers. There are several reasons. One among them is that private lenders are not lending the same moneys that were formerly lent, particularly in western Canada. I have before me here a brief submitted by Sol. Sinclair who is professor of agricultural economics at the University of Manitoba, who is a master of science and a doctor of philosophy. I think he was appointed by the Manitoba federation of agriculture and cooperation. The brief is entitled "Government action for long term credit for farmers in

[Mr. Studer.l

western Canada". This is a recent brief, being dated January 19, 1955. He gives

instances of the situation in regard to private centralized lenders that were formerly and are still in operation in western Canada particularly, but to a much lesser extent than formerly. He says that the decline in loaning set in mostly from 1947. He mentions that the decline has been continuous, and is especially marked for Saskatchewan. Then he says:

For example, in 1947, holdings-

That is private lenders' holdings in the province of Saskatchewan.

-in that province were $30,185,000.

That was in 1947.

In 1953, they had declined to $8,125,000.

Or in other words their lendings declined.

In Alberta and Manitoba, the decline, while evident, was not as drastic. For example, the 1947 holdings of these companies in Manitoba amounted to $7,297,000 and in 1953, they were $5,362,000.

That indicates what the private, centralized lenders think of the situation throughout that particular area. But here is a conclusion at which this professor arrives. At the end of that particular column he mentions the reason for the decline. He says:

This is due to the restrictive legislation relative to farm mortgages and their collection that exists in these two latter provinces.

The reference is to Saskatchewan and Alberta. That is not my opinion. It is the opinion of a professor of economics. If that is the situation, then we should do something throughout these provinces to remove those detrimental effects upon the lending that could be in evidence were that restrictive legislation not in existence.

In Saskatchewan we have some acts on the statute books. I do not wish to prolong this debate, but we wonder why the legislation is not used. Here we have the farm loan enabling act, which is chapter 209 of the revised statutes of Saskatchewan, 1953. It reads as follows:

An act to facilitate the operation in Saskatchewan of the Canadian Farm Loan Act.

This is what it does:

This act allows the provincial treasurer to subscribe to the capital stock of the Canadian farm loan board, sets up the provincial farm loan board to make loans directly to farmers or to co-operative and colonization societies and, in general, implements and supplements the Canadian Farm Loan Act.

I wish someone would outline to me what benefit this act has been to the farmers of Saskatchewan, if it has been operative.

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

Willis Merwyn (Merv) Johnson

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

Mr. Johnson (Kindersley):

Would the hon. member permit a question?

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

Irvin William Studer

Liberal

Mr. Sluder:

The fact is that it has not

been operative. If there is any government in Canada that should have the interests of the farmer at heart, it should be the Saskatchewan government. They are empowered under this permissive legislation to enable the farmers to take advantage of what the federal government is endeavouring to supply, and they in turn guarantee in effect what the provincial government may put into operation in Saskatchewan, learning from the experience of the past, learning from their own omissions, and thereby providing intermediate credit to the farmers of Saskatchewan, young and old, as the case may be.

One of the greatest reasons I think for the non-granting of loans in my part of Saskatchewan, which is the southwest area, is the fact that the land is poor in many instances. Over a period of years the land has not enjoyed the yield or the natural blessings that ordinary or normal land, we might call it, throughout the country has enjoyed. As a result of that fact, all lending institutions may be more hesitant in lending there than they would otherwise be. It is not a case of the farmer not being worthy. It is a case of the non-yield of the land over a period of years.

My understanding is that wherever land has come under the benefit of the Prairie Farm Assistance Act, the crop failure act, for a period of 10 to 12 years successively, that is land on which anyone might be hesitant to lend money. After all, the only way in which the land can repay the loan is through its yield, or in other words through its productiveness. I believe that more than the ability of the farmer, the land or the economic unit is the fundamental basis on which the money is lent. If we could devise an institution that will lend money to everyone, regardless of that situation, I think all of us would be happy. Unfortunately that has not been in evidence. If the province would just fulfil some of its obligations, perhaps they would be willing to take care of this marginal situation whereby the people of Saskatchewan would be primarily interested, and it would not affect all of the people all across Canada,

As was mentioned by the hon. member for Qu'Appelle the young farmer now is obliged to pay cash or close to cash. That seems to be the demand. In former years it was possible to sell land under almost any long term of repayment, but in recent years or during the past 10 years that situation seems to have disappeared, and people wishing to sell their land demand that more of a cash payment be made, if not an entire cash payment, for various reasons, some of which may be the same as those indicated here in this

Canadian Farm Loan Act brief to the Manitoba federation of agriculture by the professor of economics of the University of Manitoba.

I wish to extend the benefits, as does this government, to everyone who can in the least manner qualify. I think we must recognize the humanitarian sentiments of those people who live close to the soil, those people who wish to produce the necessities of life for the great number of people that are now in existence and will be in existence. They have humanitarian motives in endeavouring to provide the food for the masses. I do not think that our government institutions will be any less humanitarian in giving them proper consideration in connection with their right to a loan. I appreciate the efforts of all governments, provincial and federal, that may assist the farmers of Canada.

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

Hayden Stanton

Progressive Conservative

Mr. Hayden Stanton (Leeds):

Mr. Speaker, I am sure the farmers of Canada appreciate the fact that the farm loan act is being amended, through Bill No. 84, so it will more fully meet the needs of the farmers. But I feel that the farm loan act should be geared to meet more adequately the needs of the borrower, and should be administered with a more sympathetic understanding in the same way the Veterans' Land Act is administered. At the present time farmers of Canada are seriously in need of farm loans in order that the small size family farm may be restored to the position it rightly occupies within our agricultural economy. I believe that is why the small size family farm is fast disappearing. The young man cannot borrow an adequate amount of money to enable him to purchase the farm and continue his farming activities.

This may be attributed to three reasons. I can well remember that in most localities one was able to borrow money on farms. At the present time the lenders of money are looking for more attractive investments. The second reason is that elderly people who used to lend money are placing their money in stocks and government bonds. A few years ago an aged farmer could sell his farm and take the mortgage on that farm. Today it is impossible for him to do that because he would have to have a good sized farm in order to realize sufficient cash to purchase a residence in a town or village. It is necessary for him to receive almost the total amount of the purchase price of the farm in order that he may obtain a home for the remainder of his days.

I believe the size of the loans should be increased from $15,000 to $20,000. As we know, today farms throughout this country are on a much larger scale than they were. It is necessary, therefore, to have a larger down payment in order to purchase that

Canadian Farm Loan Act larger farm. I find that the grievance throughout eastern Ontario, and I believe it is general throughout Canada, is that there is too wide a differential between the amount of loan that can be obtained through Central Mortgage and Housing Corporation, and the amount that can be obtained through the farm loan board. I should like to give an illustration of that. A farmer may have three sons, two of whom may be working in industry for three or four years. The other boy is at home on the farm. The two who have been working in industry perhaps have saved $1,000 or $1,500. One of these boys is content to continue working in the town, but he wishes to build himself a home. He is able to do that through Central Mortgage and Housing Corporation and he can acquire a $10,000 home with a down payment of $1,000. The other boy may cherish the idea of going back on the farm. What does he find? In order to purchase a farm valued at $10,000 it is necessary for him to acquire enough money to equip that farm with machinery and cattle and still have $3,500 for a down payment.

This hardly seems fair. I hope when this bill goes to the committee for further consideration, the maximum amount of the loan will be raised to at least 75 per cent of the appraised value of the farm. When we speak about appraised value, it should be noted that appraisers are very careful and set a very moderate valuation. Generally speaking, the appraised value of the farm is somewhere near the assessed value, and that is nowhere near the actual sale value. I say that the 65 per cent of the appraised value mentioned in this bill means actually only 40 per cent or 50 per cent of the sale value. When this bill goes to the committee I hope it will be amended so it will meet the needs of the young men who are contemplating buying farms in the next few years. I was rather amused to hear the hon. member for Grey North (Mr. Bennett) make the statement today that the farmers of Canada were in need of help through farm loans, and that their income is not as good as it has been in the past few years. He is the first member on the government side of the house whom I have heard admit that. With those few rambling remarks, Mr. Speaker, I may say I hope the bill will get further consideration when it goes to the committee and is brought back to the house for third reading.

Topic:   CANADIAN FARM LOAN ACT
Subtopic:   AMENDMENTS TO REORGANIZE CAPITAL STRUCTURE, INCREASE AMOUNT OF LOANS, ETC.
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March 20, 1956