Province ups feeder association loan guarantee program pot by $45 million

By Tim Kalinowski, Staff Writer

On Sept. 14 the provincial government of Alberta announced that it would be adding an extra $45 million to the Feeder Association Loan Guarantee Program, bringing the total dollars in the fund to $100 million.

Joe Kuhar, General Manager of the Feeder Associations of Alberta, says the additional funds will be put to good use by his members.

“This is definitely huge for our industry,” states Kuhar. “Basically that doubles our ability to finance the cattle that are raised and grown here in the province… With the cattle price increase in 2014 and 2015, our feeder associations were limited in our ability to lend. We reached our $55 million cap, and, as such, there was a transition period before our feeders were able to access additional funds. Until that happened some of our existing feeders were unable to purchase livestock.”

The Feeder Association Loan Guarantee Program, established in 1936, allows Alberta’s 46 local feeder associations to give low interest loans to their members to purchase cattle. About 25 per cent of calves in the province are bought and sold using this fund. Kuhar says the program has been so successful since its inception there has only been a minuscule 0.1 per cent default rate.

“It’s been very successful. And that’s to due with the protocol and the process supervision involved… There’s a huge value to the feeding industry in as such that it does require a large amount of capital. With the lower interest rates available to our feeder association members, and a lower down payment, it makes it easier to be able to purchase cattle. The bottom line for a feeding association is profit per head or dollars per head; every bit counts toward that bottom line.”

While delighted with the increased funds, Kuhar wishes the program could have been rolled out last year, when cattle prices were at historic highs. The process for getting this new money began in 2014 while provincial Conservatives were still in power.

“The timing of this announcement could have been a little better,” he admits. “The framework was in place to work toward this, but the previous Conservative government figured we needed to go through our regulatory review process in order to have that completed. That has now been completed, and that’s why we now have this announcement.”

But this is just a small quibble, says Kuhar. The end result here is a stronger Alberta feeding industry going forward thanks to this cash injection into the Loan Guarantee Program.

“Working with the provincial government, and realizing the workload they’ve had with the (economic) challenges they have, has been a very positive experience. We’re very happy to see the outcome that has taken place here.”