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UPA keeps seats on ag lender’s board

Legislation passed Wednesday to update the governance of La Financiere agricole du Quebec (FAQ) will continue to set aside five seats on FAQ’s board for the province’s general farmer organization.

Under the legislation as passed, l’Union des producteurs agricoles (UPA) will designate nominees for five of 15 seats on the provincial ag lender’s newly expanded board. A 13-member board was proposed when the bill was introduced last month.

But the new legislation also ensures the remaining 10 appointees, including the chairperson of the board, will be independent members named by the provincial government, the province said.

Ag Minister Laurent Lessard said the legislation follows the recommendations on the Pronovost report on the future of agriculture and agri-food in Quebec, which had urged the province to move quickly to bring FAQ’s governance in line with legislation on state-run enterprises.

The Pronovost commission’s report, released in February, noted a statement by UPA at that time that “lawmakers have based La Financière agricole du Québec’s legal makeup on a unique partnership with the agriculture sector.”

However, commission chairman Jean Pronovost noted, out of 11 FAQ board members at that time, five, including the chair, were chosen from people designated by UPA. FAQ’s president/CEO, who also sat on the board, was appointed after consultation with UPA, Pronovost noted, and UPA’s president chaired FAQ’s board.

By comparison, provincial legislation on state-run enterprises requires two-thirds of board members, including the chair, to be “arm’s length” directors with “no direct or indirect relations or interests (e.g., financial, commercial, professional, or philanthropic) likely to detract from the quality of their decisions with regard to the interests of society,” Pronovost said.

Legislation on state-run agencies also dictates that a board member is limited to just two terms, consecutive or otherwise, he said.

As the Pronovost report outlines, FAQ runs the provincial farm financing program, the farm income stabilization insurance (FISI) program, crop insurance, support programs for new farmers and a loan portfolio worth $4.3 billion at that time.

FAQ’s loan guarantees of up to $5 million per farm often constitute a key condition for banks and other lenders to give farmers access to credit. In 2007, 15,812 clients — more than half the province’s farmers — used FAQ financing programs.

The Pronovost report overall described Quebec’s farm and agri-food sector as so closed in by its regulations, systems and structures that “they are in danger of literally suffocating it.” Among its recommendations were to achieve “pluralism in agricultural organizations” by ending the UPA’s monopoly as the province’s farmer organization.

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