Opening Remarks

Good morning, my name is Alex Ciappara and I am the Director of Economic Analysis for the Canadian Bankers Association. I am joined by representatives of the five largest banks in Canada, and we are pleased to be here today representing the CBA, our 55 member banks and over a quarter million employees in Canada. We appreciate the invitation to speak to the Committee as part of your study on research and innovation efforts in the agricultural sector, with a focus today on the financing of farms.

The bank representatives here with me today have experience sitting on both sides of the lending desk − working now as bankers, they all have unique agricultural backgrounds. Given this wealth of experience, I will keep my comments brief. I will, however, take a moment to outline how banks work hard to serve farmers, agricultural and rural communities.

Helping farmers and rural communities with their banking needs

Banks in Canada recognize the important role they play in supporting farmers and rural communities through our financial products and services.

Banks provide deposit and operating accounts, insurance, and investments, in addition to operating, term and mortgage loans. Banks also offer the AgriInvest account and CALA loans, and support the Advance Payments Program (APP). Banks provide advice to farmers on matters such as farm loans, economic forecasting, farm business planning and general farm management. Banks also work with producers on succession planning to ensure a viable transition to the next generation.

Banks understand that supporting farmers means having to be flexible in order to fit their busy schedules, particularly during planting and harvesting seasons. Banks supply products and services through roughly 2,100 rural and small town branches across Canada. Mobile bankers drive to farms to provide onsite banking assistance. And farmers can access many of these products and services on their smartphone apps, on-line and through telephone banking.

On the personal side, banks help rural customers save for their children’s education, for their retirement and provide specialized advice, lines of credit, loans and mortgages, as well as everyday banking needs such as chequing and savings accounts.

Agricultural and rural customers have access to the same product, services and prices as customers in Canada’s largest cities. Indeed, a recent Industry Canada survey showed that rural small and medium-sized enterprises (SMEs) had a higher approval rate for their debt financing requests than urban SMEs, and when it came to obtaining financing, rural SMEs ranked it as the least problematic external obstacle to growth.

Financing farmers

Bankers understand the importance of access to credit for agriculture. The sector forms an important part of banks’ business lending portfolio with agriculture lending representing 16 per cent of total funds loaned to SMEs by banks. And bank credit represents 36 per cent of the total farm lending market. In addition to the over $25 billion that farmers have borrowed from banks, close to $12 billion in additional credit has been made available to farmers without any additional application. The five banks represented at this table compete vigorously with one another and with credit unions, caisses populaires and finance companies, as well as FCC and provincial government agencies.

Canada’s banks pride themselves on prudent lending standards and risk management practices. This has resulted in a reputation for safety and soundness that is internationally recognized. It is this approach that fosters financial discipline and contributes to the financial security of the economy, including the agricultural sector.

Banks work with farm clients on an individual, case-by-case basis assessing a number of criteria such as their cash flow capacity and requirements, time horizon, business prospects, customer base, and available equity.

As a result, bank credit has expanded in line with the agricultural sector’s growth. Between 2001 and 2011, the authorization of bank credit has been consistent with, and appropriate for, growth in the sector. This mainly reflects the point that a fairly large portion of the banking sector’s lending is for the purposes of working capital and operating lines of credit. This type of financing requires the bank to truly understand its customers and to work closely with them over time.

Helping throughout all stages of a farmer’s life and business

Banks have a long standing commitment to the agricultural sector and know what it means to assist farmers through all stages of their life and business.

The banking sector is a major sponsor and supporter of programs and events that attract youth interested in farming, and young farmers themselves. Individual banks have been long-time members, proud partners and financial contributors to 4-H clubs for more than half a century at the national, provincial and local levels. Banks are also sponsors of programs such as the Canadian Young Speakers for Agriculture series, Canada’s Outstanding Young Farmers Program, Ontario’s Farm Family Awards; as well as scholarships offered through the Agricultural Institute of Canada Foundation. Banks sponsor showcase events that attract the next generation of farmers, such as the Calgary Stampede, the International Plowing Match, the Outdoor Farm Show, the Royal Agricultural Winter Fair and Canadian Western Agribition.

As farmers establish themselves in business, banks work with them through the inevitable peaks and troughs that come in the agricultural sector. This past decade has seen farmers confront BSE, avian influenza, drought, floods, the H1N1 virus and country of origin labelling (COOL). When these events occur, bankers work closely with farmers, taking into account their individual situations to find solutions that are sustainable and in their best interests. Sometimes banks need to have tough conversations with clients so that farmers can make decisions that preserve the capital of their farming operation. The banking industry’s work during these events is the tangible demonstration of our interest in contributing to the long-term viability of Canadian farmers.

As farmers start thinking about retirement and passing their business to the next generation, banks have the expertise to assist with this transition. Our experience is that few farmers have a written succession plan. Indeed, according to the 2010 Farm Financial Survey, only 9 per cent of farms have such a plan. There are complex issues, often emotional ones, that the family has to address − the viability of the farm operation, adequacy of the income being generated, and a host of other issues. Because of banks’ relationship with farmers, they are able to look at the full picture of a farm family’s needs to create a succession plan that encompasses everything − from banking and lending services to insurance strategies, investment management and estate and trust planning – in order to protect income and assets for both the younger and older generations. Bankers are able to draw on the knowledge and the resources of the wider bank financial group such as private wealth management and investment teams, and the network of external local contacts in accounting, consulting and legal fields.


Banks have long, established and strong relationships with farmers across Canada. These relationships have been developed in branches, around kitchen tables and at agricultural events in farm communities. And it is because of these relationships that Canada’s banks are well-positioned to work in the best interest of farmers through good times and bad.

We would be pleased to answer your questions.

Thank you.