Forty-year flashback: Financing farm drainage
July 2, 2013 By Drainage Contractor
July 2, 2013 – Drainage Contractor magazine is celebrating its 40th anniversary in 2013, and to celebrate, we’re taking a look back at what made the headlines 40 years ago with Forty-year flashback, a series of articles from the magazine’s first few editions.
The following article, originally published in the Fall 1973 issue of Drainage Contractor, details the options available to farmers to assist in the financing of drainage systems. How times have changed!
When it comes to financing farm drainage, the role of government looms large. First, the bad news. For instance, when the Ontario Government restricted the two-thirds ARDA grant to Eastern Ontario, the industry felt the pinch throughout the rest of the province.
Now, the good news. The Tile Drainage Act, 1971, continues a policy of the provincial government, which makes subsidized funds for farm drainage available to interested and organized townships.
Providing a township has passed the necessary By-laws under the Tile Drainage Act, drains can be financed with four per cent interest loans. That means that a $1,000 loan, repayable over 10 years, has cost $233 in interest; not bad.
The farmer has had the use of the drain for 10 years and is able to repay the loan in dollars, which continually depreciate. Mr. Vern Spencer, drainage co-ordinator, OMAF, has the full details required by municipal clerks.
In 1967, the Ontario government began a capital grants program which is pumping $129,000,000 into the farm economy over 12 years. Eligible farmers can recoup 40 per cent of the cost of drainage, up to a maximum of $3,000; with a $10,000,000 annual ceiling now in effect, some farmers may have to wait until the following year for the provincial grant. Both tile drainage and private open ditches are eligible improvements under the capital grants program.
Quebec also has comprehensive policies that effect financing of farm drainage. The Agriculture and Colonization Department Act provides for subsidized credit; the Farm Credit Act requires an equity as low as 10 per cent, loans up to $25,000 repayment over 39.5 years and interest rates as low as two per cent. The Agricultural Hydraulics Division makes grants of up to 10 cents per linear foot and is even authorized to lay drains, without charge to the farmer.
British Columbia financial assistance policies are designed to encourage complete drainage systems; piecemeal, ad hoc schemes are discouraged. The Agricultural Land Development Act provides for loans up to $15,000, which are repayable at four per cent interest in up to 15 years; assistance is conditional on approved planning.
In Prince Edward Island, the recent Provincial Family Farm Program includes capital grants of 50 per cent of the cost of land drainage up to a maximum of $6,000 per farm plan.
Like every other province, New Brunswick has developed its own unique financing schemes. The Agricultural Resource Conservation and Development Program provides for 50 per cent grants for both drainage materials and installation; farmers finance the balance from their own resources or regular credit agencies.
Nova Scotia typifies many of the provincial financial policies that are made possible through cost-sharing with the federal government under an ARDA agreement. Drainage is an important part of the capital grant program, which pays 45 per cent of approved costs up to $40,000 in any five-year period.
Alberta has its own distinctive programs designed to serve the special provincial needs. There is a close correlation between irrigation and drainage policies. The construction of main, interceptor drains is financed through an 86 per cent provincial infusion, while the irrigation district concerned pays the remaining 14 per cent.
Other means of financing farm drainage are national in scope. Funds for drainage are available from the Farm Credit Corporation, where the interest caries from time to time, but remains constant for individual loans. The Farm Improvement Loan Act (FILA) has encouraged the chartered banks to make loans at a nominal 6.25 per cent interest; in the current credit squeeze, the banks are showing increasing reluctance to loan money under FILA. The chartered banks are also a source of credit in their own right; but there again, inter-interest rates have been spiralling and are not likely to be available at less than eight per cent interest for the best credit risks.
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