Financial uncertainty hits B.C. dairy farmers as major operation forced into creditor protection:
“The dairy community in British Columbia is relatively small, and I have friendly relationships with a large number of farmers across the province. As I understand it, in 2019, right around the time of the loan, The Bank [of Nova Scotia] became very active and aggressive in lending to the dairy industry,” Dykman’s affidavit says.
“I am personally aware of at least six other dairy farmers who are in a similar position as me with the bank in that they fell into default as a result of increased interest rates or other circumstances outside their control and are now either in a forbearance agreement with the bank or being pushed to sell lands, quota or entire operations.”
Government is always the problem. Prove me wrong.
Everything the government touches loses money.
Interesting. BCFruit went into receivership recently now dairy farmers? Are they trying to close down agriculture? Oops, of course they are.
Dairy farming is as close to a cash minting operation as you can get
Debt went from 44 million to 75 million in 5 years?
BINGO … lots of missing info in this article but WTF did they have so much debt and why did it grow so fast.
Sounds like poor financial decisions are behind this fuster cluck.
Maybe the evil banksters held a gun to the farmer’s head and forced him to borrow all the money SARC
They were giving the nod to higher interest rates. If you’re carrying $44 million of debt at 2.0% interest, what happens when rates go to 5.0%?
Looks like he’s paying about 5.6% on that $75 million.
Of course, the Ceeb doesn’t ask the right questions, like how he went from $44 million at Farm Credit Canada, to $75 million at Bank of Nova Scotia
They didn’t ask how much milk he dumped either.
Interest rates don’t account for the rise in debt, which is the main problem. Go from 2% to 5% on 44 million accounts for 1.3 million per year or 6.5 million over 5 years. Yet debt increased almost 5x that. To me, that’s a core business issue. Even if you had wiped out the debt 5 years ago, they’d still be in trouble today.
Bankruptcy couldn’t happen to a nicer bunch of collectivists.
The big downside of supply mismanagement is the outrageous cost of quota. Financing it at current interest rates is deadly.
With something like 7% of Canada’s milk production destroyed annually to keep the price jacked up while paying for the greatest lobbying effort in the nation, the system is in need of reform. How about a transition to a free market extinguishing quota over a 5 year period for example?
Saputo anyone?
Why does Quebec have the lowest unemployment rate?
The article states that prices are fixed on milk, as though we are supposed to feel sorry for the milk producers.
…but omits to mention that it also removes all their competition, artificially massively inflating the prices at which they may sell to a captive market.
Supply management does not belong in any supposedly free nation on earth. It is a cartel, run for the benefit of the insiders and preying on Canadians. If it weren’t for a corrupt federal government, millions of Canadians wouldn’t need to cross the border for eggs, milk, and gas.
I won’t cry a tear for any who go under.
I am NOT impressed with the Bank of Nova Scotia – they treat customers very badly – my experience!
You are right, Big Momma. I had a 72 month car loan, paying them $1068.54 each month. Never missed a payment. At the end of the 72 months, they billed me for an extra $1.32. I went into a branch, and laid 4 quarters, two dimes, and three nickels on the counter, and smiled sweetly at the teller when she gave back one of the nickels. I now stipulate when I finance anything, that the Scotiabank people be excluded from consideration.
76,934.80, that’s quite the price.
You are worried about a 1.32. You know that computers have to be satisfied.
When I pay a credit card statement I always add a few cents, the bank then has to keep those few cents on the books because of ….computers.
Poor financial managers borrowed too much money, counting on their fixed market quotas for income. But, I wonder how many new F350 Platinums the family owns? They got caught living high on the hog and rates went up.
If this were endemic in the industry, they would all be going down. Instead, it looks like a careless and aloof spendoholic. It is a Corpse story after all.
My guess is that the bank was happy to lend to the farmer given that land values in the Fraser valley are astronomical and increasing every year. Or at least until recently. They will just sell off the assets and possibly come out ahead. While the cost of quota is astronomical, another farm or farms will snap up the bankrupt farm’s quota in a split second.
Did anyone ever consider that the dairy industry isn’t scalable to 1,800 cows? Simply, there may be no economies of scale. Dairy farmers are usually the richest among their neighbors. They have a return calculated to produce a good profit based on normal input costs. Normal labour cost for a 100 cow herd is family labour plus a local retard put up in an old house on the farm who is paid minimum wage less rent. With 100 cow herd much of the feed is raised on the farm. An 1800 cow herd buys all their feed and transports it distances. A 12 person payroll must be well paid to be reliable. With 100 cow herd, the farmer and his wife and kids can milk all of them if they have to. An 1,800 cow herd, not so much.
Many dairies in the US are 1200 plus. I think the cost of financing the quota is probably the biggest issue here.
Quota and government control is the problem.
The dairy industry isn’t scalable? Unlike fisheries?
Don’t you just hate Canadian dairy?
The average dairy in the US is milking over 330 cows in 2024. The largest herd is 30k+.
Canadian bank fall all over themselves financing quota. I don’t care if every dairy in Canada goes broke.
I was in the industry many years ago and even then the pricing structures were ridiculous. Dock costs, rebates, vol discounts, real costs, farmers dumping milk, quotas, it was a convoluted system to say the least. I knew a few of the farmers that supplied our plant and they were not millionaires. All worked 7/365.
” … or other circumstances outside their control …”
Jeez. Here I was, thinking all along that the decision to borrow was pretty well controlled by the individual.
Well, perhaps none of you have met any very good dairy farmers. I met one who is an Ontario 5th cousin. He treated me to a wonderful day tour of his property and we shared genealogical information.
I have always lived an urban life, but dad was a rancher as a youth, and his grandparents and theirs since 1883 in Alberta and Saskatchewan as pioneers, and other family farm owners in “Quebec”/Upper Canada from 1790.
I definitely did know where meat came from, as my uncle roasted a pig for our family dinner when we visited when I was age 9. And my younger cousins, aged almost 9, 7 and 4 knew how to ride horses! I got to try too!
Fifty years forward, my 5th Ontario cousin showed me his calves ( take your foot off – do I seriously need to say baby cows), who were settled in large pens, separated by sex, with ample food, outdoors in summer at the time. Then, we toured the property where many cows were grazing. Finally we toured a barn, where mature well-fed cows were being milked by machines. Finally, we toured a very pristine area where milk was being prepared for sale. It was a day well spent and, yes, he drove a rather nice convertible, but it was an extremely fun learning opportunity to appreciate his profession.
Good dairy farmers are the ones who didn’t borrow insane amounts of money for land, milk quota, and machinery. There are still a few around. But their ranks get thinner every year.
All Canadian farmer are under withering attack from CCP (Liberal Party of Canada), but in this BC case I would hazard a guess that Ottawa & Quebec are seeking to eliminate dairy competition at the expense of The West.