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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.

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