JANUARY 2025
CELEBRATING 146 YEARS AS CANADA’S PREMIER HORTICULTURAL PUBLICATION
THEGROWER.ORG
RISKS & REWARDS
Borrowing billions: getting bigger or getting better?
The costs of innovative technology are sky-rocketing at the same time as climate risks are threatening horticulture. How to finance sector growth and generational transfers becomes a key question for 2025. Justine Hendricks, CEO, Farm Credit Canada (L) recently met with Dr. Mary Ruth McDonald to see table-top strawberries at the University of Guelph. Until recently, Dr. McDonald has been one of the university’s liaisons with the Ontario government on $373 million research dollars over five years. Those millions are seed money for new technology that’s then commercialized and financed in the billions by Canada’s bankers. Photo by Bruce Sargent.
KAREN DAVIDSON Thanks to the adoption of new technology, Canada’s 262,000 farmers are producing more than ever before. The Bank of Montreal (BMO) reports that since the late 1990s, total labour productivity in Canada has increased by 31 per cent, while agriculture has surged 190 per cent over the same period. Aaron Goertzen, senior economist for BMO writes: “Few sectors of the economy can hold a candle to that performance.” Here's a sample of what growers are investing to produce more per acre. Building a state-of-the art vegetable greenhouse runs $1.2 to $2 million per acre. Planting high-density apples in an orchard comes in at more than $50,000 an acre. And that new potato sprayer with a 120-foot boom: $600,000. For about the same price you can get a new potato harvester. But it’s tempting to add a $30,000 subscription package to optimize your data
Ontario Potato Board AGM Volume 75 Number 01 P.M. 40012319
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collection. All of that new technology – AI, optimized LED lighting, robotics -- is priced at a premium, given that most purchases are in U.S. dollars. It may be just coincidence that Canada’s $6 billion annual farmgate value for horticulture almost equals Farm Credit Canada’s (FCC) current $6.1 billion horticulture loan portfolio. The sector represents 11 per cent of FCC’s total agricultural lending business, with greenhouse borrowing alone at $2.5 billion. “We have a reputation as a senior secured lender,” says Justine Hendricks, CEO, Farm Credit Canada, the Crown Corporation mandated since 1959 to provide loans to farmers. Marking two years this month as leader of the Regina-based lender, she shares the FCC strategy rolled out during her cross-country meet-up with owners and employees from all agricultural sectors. “Be more bold,” Hendricks told the 2,300 employees at 103 branches across the country.
Generational change in ag ministers PG 13 @growernews
“Be an industry catalyst,” she urged to innovate FCC’s products and services. Highlighting the atmospheric river that flooded the Fraser Valley in November 2021 as an example, she noted that within 48 hours FCC employees reached out to British Columbia blueberry growers with customized solutions such as payment deferrals. “Be a partner,” she said of FCC’s desire to work with other banking institutions. Practising what she preaches, she presented FCC’s story to a meeting of the Canadian Bankers’ Association. Promoting the idea that today’s capital-intensive farming requires more financing ingenuity, FCC sometimes looks to the re-insurance model of sharing risk with other institutions. In the real world, the business case for any expansion or adoption of new technology is often made by the grower 12 to 18 months before deployment. Accordingly, growers talk to their bankers on a regular basis, pressure testing how much credit might be available. Continued on page 3
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