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Credit crunch not yet hitting Canadian ag

(Resource News International) — Western Canadian farmers looking to buy some new land, improve their equipment or simply make ends meet until the next year’s harvest don’t yet appear to have run into problems securing credit.

However, an executive with federal ag lender Farm Credit Canada said Monday, if the global financial crisis escalates or drags on, agriculture could eventually feel the brunt as well.

“At this stage, I’d say it’s a very normal credit market in agriculture. Whether it’s Farm Credit Canada, the major chartered banks, or credit unions, they’re all actively lending into agriculture,” said Michael Hoffort, vice-president of prairie operations with Farm Credit Canada.

There was no reluctance to provide agriculture loans for the time being, he said.

Looking at all potential areas of investment, Hoffort said the agriculture sector was looking relatively strong at this point. “We deal with the biggest to the smallest farmers in Canada, and everybody’s credit policies are fairly consistent,” he said.

As far as demand for credit products is concerned, Hoffort said it was trending higher in majority of the markets in which FCC deals. While the hog and cattle sectors are experiencing some challenges, he said the optimism in grain and oilseeds earlier this year had many producers looking to secure some credit to expand their operations or purchase new equipment.

Overall, Hoffort expected the demand for credit to remain steady through the winter months.

However, “agriculture, as good as it’s going… won’t be totally insulated if there is a liquidity crunch in the financial markets,” said Hoffort.

If the U.S. financial crisis escalates or drags on for a long time “at some stage, if there was a shortage of cash to be put into loans, agriculture could see some cost changes on that side of things, with the rest of the marketplace,” he said.

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