Ontario Agriculture

The network for agriculture in Ontario, Canada

The CFFO Commentary: The Positive and Negative Roles of Farm Debt

By John Clement
January 14, 2011

Farm debt can be a contentious issue in farm circles. Used properly, and with clear sailing on the horizon, debt is a very practical tool for building a business. However, used improperly, or accompanied by stormy economic times, debt can be a millstone that strangles a business and limits future options.

The Christian Farmers Federation of Ontario is currently taking some time to re-examine the role of debt within farming businesses. Many of our members have become concerned for themselves, and others, regarding the place of debt due to several factors. While being supportive of entrepreneurship and the necessary commitment to manageable debt that goes along with it, many also remember turbulent times in recent decades and accompanying fluctuations in interest rates and land values.

Some of the reasons for our members’ concerns include the following:

  • Ontario farmers are some of the most heavily indebted farmers in North America.
  • There are indicators that interest rates could soon be on the rise
  • It’s become increasingly common for farmers to operate on an interest-only basis
  • Land prices and land rental rates continue to escalate at what many would view as unsustainable levels.

There are fears that this set of circumstances may be a recipe for disaster in the next several years. In addition, there are several admonitions in the Christian scriptures that caution about the perils created by uncontrolled debt. Accordingly, the CFFO is examining both the positive and negative aspects of debt in farming businesses at its policy committee meetings. We’re hoping that a pooling of research and experience will yield some proactive guidelines that we can eventually share with the larger farming community.

I think that the concerns of our membership are well placed. It’s not a nice picture to see hard-working families do everything “right” in their farming operations and then be taken down by fluctuations in financial markets. I’ve lived long enough to remember an era of farm gate defenses against creditors, “penny” auctions of assets, farm debt reconsideration processes, and farm families leaving their businesses and homes. Expressing caution, while being proactive in using and managing debt, just makes a lot of sense.

John Clement is the General Manager of the Christian Farmers Federation of Ontario. The CFFO Commentary represents the opinions of the writer and does not necessarily represent CFFO policy. The CFFO Commentary is heard weekly on CFCO Chatham, CKNX Wingham, Ontario and is archived on the CFFO website: www.christianfarmers.org. CFFO is supported by 4,200 family farmers across Ontario.

Views: 26


You need to be a member of Ontario Agriculture to add comments!

Join Ontario Agriculture

Agriculture Headlines from Farms.com Canada East News - click on title for full story

2020 grains, oilseeds and pulse outlook update: Weather and global demand to influence profitability

The COVID-19 pandemic triggered a global recession, highlighted by severe supply chain disruptions, including reductions in processing capacity and plant shutdowns. Despite these challenges, trade of Canadian grains, oilseeds and pulses has performed well in the first half of 2020.

2020 Wine Grape Price Agreement

The Grape Growers of Ontario, under unique circumstances, came to a consensus yesterday with Ontario’s wine processors on the 2020 wine grape prices. After a full day of negotiations, the Grape Growers of Ontario agreed to accept the processors final offer of an overall 1% increase.

Western Bean Cutworm Catches are Climbing

We are just entering into Week 10 of trapping. Western bean cutworm trap catches have definitely increased over the last few days.

Ontario Improving Farm Animal Health and Agricultural Productivity

Research investment will help farmers safely manage livestock

Burnbrae Farms donates more than 3.6 million eggs to Canadian food banks

In response to the COVID-19 pandemic, Burnbrae Farms has established a crisis relief program to support Canadian families in need of assistance.

© 2020   Created by Darren Marsland.   Powered by

Badges  |  Report an Issue  |  Terms of Service