AFSC

[dfarms11]

My neighbor went to AFSC to get a loan to buy some land and get started farming. Everything seemed to be going good for him until they asked how much money he made last year. He was then told he could not get a loan through AFSC. They proceded to tell him their reasoning was that he made TOO MUCH MONEY!!! Isn't that just a kick in the !@#$%. Here's a guy who loves farming and has a good job, but wants to increase the size of his farm but can't because he makes too much money! Whats this world coming to!!!

[farmers_son]

I think AFSC should have turned this fellow down.

Certainly public policy has changed on this in the last 20 years. I can remember when FCC would not give a loan to anyone unless they could show repayment from actually farming the land. Now they do. And I believe AFSC will allow off farm income as part of the debt repayment capacity but apparently there are limits.

I would ask why the fellow just does not go to the banks and borrow the money. Why does he have to access what is a subsidized rate from AFSC?

Lawyers, doctors, dentists want to take the very high salaries they make and invest in land, cattle etc. for tax write offs and to play. Now, at least in Alberta, the oil sector has spawned another group of nouveau riche. These people compete for agricultural resources with the primary producer who actually intends to make a living from the land. There is no doubt that the doctors, lawyers, dentists, oil field workers can pay more for land than someone who actually farms the land. Should government subsidize these people to buy land away from full time farmers? If government did there would soon be no full time farmers left or at least full time farmers who actually owned their own land. That just seems wrong.

Your neighbour may love farming, just not enough to actually do it full time. Farming should be for farmers. If the guy wants to buy the land and can afford it why does he have to have a subsidized loan from AFSC.

[coppertop]

agreed farmers_son. I have always been under the impression that AFSC was a lender of last resort, for bonafide farmers or those wanting to start farming, and didn't have collateral to borrow at a conventional bank.

As with any subsidized funds, service etc. there has got to be strings attatched to ensure that only those who meet predetermined criteria qualify.

[PureCountry]

Tell your friend to try Farm Credit Canada instead of AFSC. Little higher interest rate, but they have a different policy on off-farm income. Trust me, we just got a loan through them, and we were turned down by AFSC for that same reason. Manager at AFSC told me though, that he hopes to see that policy lifted once a new Premier comes into power. He said they're a business, plain and simple, and don't want to turn away people for lending, when they can make money off of their money.

[dfarms11]

I understand what you guys are saying, I told him thats probably what they are thinking as well, BUT you guys know as well as I do that nobody in this day and age can afford to start up from basically nothing and buy land and expect it to pay for itself! Hell my AFSC loans officer told me that I could not get anymore money to buy anything, land or cattle because there is no money to be made. He told me to go work at the steel mill or Fort Mac and make some money! So please tell me why I (a bonifide farmer with with little off the farm income) cant get any loans either? It would seem to me that they don't want any small guys to farm period!

[farmers_son]

To the best of my knowledge, AFSC would not give me a loan either. Too much equity.

However I am sure AFSC would help my son to start farming with me and provide him an interest break the first few years too. AFSC has been pretty good to deal with, FCC has been good too but AFSC has been better.

Make no mistake about it, government lenders like FCC and AFSC influence the price of land. Their lending policies can make the price of land rise or fall. So who they do or do not lend money to impacts us all whether buyers or sellers or by impacting our balance sheets in general.

Part of the reason no one can start farming by farming these days is the government lenders do allow off farm income as part of repayment cash flows. The price of land quickly adjusted upwards to absorb the additional cash flow. Obviously, if AFSC and FCC insisted the loan repayment had to come from farm income then the price of land would have to come down from where it is today.

I agree with you that government does not want small farmers. In any event, I am not sure AFSC is doing anyone a favour by lending them money to buy land right now, especially in Alberta. It is unlikely the present economy can stay as strong as it is right now for the entire term of a 25 year land loan. Perhaps the answer to your question is that big paying off farm income should not be the only source of debt repayment capacity as that job may not be around forever.

[coppertop]

I don't think that it is just the government that discourages small farmers,in some cases representatives of the industries themselves have been pointed in commenting that small farmers don't speak for the industry etc., so perhaps the government and the industry reps it feels are the rank and file of the industry are of the same view, that only large operations are necessary to keep the agricultural economy going in Alberta. I know that more than one of the leadership candidates in the current race don't share that opinion, and are supportive of the entire agriculture industry regardless of the size of the operations involved.

[whiteface]

Have I ever been there, done that. Man, this is a real good topic to dive into even though on this one, I personally want to do more reading than offering advice or experience. I've been to hell and back on BOTH sides of this problem...
you know, can't get a loan cause you make too much money, can't get a loan cause you don't make enough money...
I have HUGE opinions on both sides of this arguement, can't wait to see more of others opinions. Hope you have a good day all!

[cowman]

How about the bank? Recently we borrowed a fair chunk of cash from the bank and quite frankly at probably a cheaper rate than FCC or AFCS?
I wonder if government should really be in the business of lending money? How is their success rate? Who gets left holding the bag if the loan fails?
I would suggest it might be the taxpayer? Is that fair to the taxpayer?
Farmers son did state a very, very true fact...cheap, easy lending has driven up land prices! That fact is indisputable?
So when you bellyache about the high cost of land(or rent) know who the enemy is...it is us! Our desire to let the"government take care of us" and guide us in everything we do! It is really, really wrong thinking?