The program, established in 1990, provides low-interest loans to beef farmers through a series of 17 local co-operatives. It’s backed by a 25% provincial government guarantee.
Here’s how it works: When farmers become members of a co-operative under the program, they are required to submit a 5% security deposit, based on the amount of their loan. In a loan default situation, the co-operative's security deposit account would be drawn on first to cover the loss.
If the co-operative was unable to cover the loss, the government guarantee would be invoked. But in the program’s 25-year history, that guarantee has never been drawn on.
The Beef Farmers of Ontario (BFO) says the program fills a gap but is fully prescribed. It says strong cattle prices over the last two years meant fewer farmers were able to maximize loans available under the program. It’s also removed the ability of many local co-operatives from taking on new members - especially young farmers who account for over a third of existing program participants, as well as farmers looking to expand.
Now, with increased support for the program, new and existing co-operative members will have greater access to affordable financing, says LeaAnne Wuermli, BFO communications manager.
“Support for this program will allow farmers to maintain and expand their herds, which is much needed in this province to support the processing sector and the current infrastructure in place that supports our industry."
Wuermli calls the loan guarantee program a business tool for farmers that will help maintain and increase the supply of beef.
Source: MeatBusiness